Mideast markets slide after US credit downgrade
DUBAI, United Arab Emirates (AP) — Stocks across the Middle East fell Sunday as most regional markets reopened for the first time since the historic downgrade of the United States' credit rating and a sharp global sell-off late last week.
The region's markets mostly operate Sunday to Thursday. That meant they were the first to open after rating agency Standard & Poor's decision late Friday to cut the U.S. credit rating one notch from its top AAA level.
Mideast exchanges — which largely take their lead from larger global markets — also had some catching up to do after Wall Street's Thursday plunge, its worst since the financial crisis in autumn 2008, investors and analysts said.
"Clearly there's a negative sentiment prevailing on the global financial markets. We're seeing a strong contagion effect," said Rami Sidani, the Dubai-based head of Middle East investments for British asset management firm Schroders.
The Dubai Financial Market's benchmark index suffered some of the region's steepest declines Sunday, tumbling more than 5 percent in early trading. It closed down 3.7 percent at 1,484 points.
While global economic concerns weighed on the Dubai market, it was also pulled down by a lower than expected quarterly profit from Arabtec Holding, the Emirati construction giant that helped build the world's tallest tower in Dubai. Arabtec shares fell 6.3 percent to 1.3 dirhams (35 cents).
OPEC powerhouse Saudi Arabia opens its market a day earlier than other regional exchanges. It plunged 5.5 percent when it opened Saturday, and failed to recover significantly Sunday, with its main index edging just a tenth of a point higher.
S&P's U.S. cut could shake investor confidence in the world's largest economy and send tremors coursing through global markets. Traders worldwide are eagerly watching to see how far larger and more liquid markets in Asia and Europe react to the downgrade when they open Monday.
Financial ministers from the Group of Seven leading economies were preparing to hold a teleconference likely before Asian exchanges open to discuss efforts to stabilize world markets.
Haissam Arabi, chief executive and fund manager at Gulfmena Investments in Dubai, said concerns about the global economy — including the U.S. debt issues that led to the S&P cut — are "dominating sentiment everywhere."
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