Traders on the Kuwait stock market walked out again after emergency financial measures by Kuwaiti authorities failed to prevent fresh falls in prices as stocks sank on all Gulf bourses.
Shares in Gulf Bank, Kuwait's second biggest financial group, remain suspended in the wake of losses on derivatives deals which prompted the central bank on Sunday to guarantee deposits and send in a supervisor. The scale of the losses is still unknown as the central bank continues a probe into what went wrong.
Brokers stormed off the floor of the stock exchange for the third consecutive trading session, urging the government to intervene to stop the price declines. The trend on the Kuwait market, the second biggest bourse in Arab world, was mirrored on other Gulf markets amid the continuing global financial crisis.
The Central Bank of Kuwait said on Sunday that the government will submit a draft law to parliament to guarantee deposits at all the country's banks. The cabinet launched a task force, headed by the governor of the central bank, to deal with the fallout of the financial crisis on the emirate.
The finance minister and the head of Kuwait Investment Authority, the emirate's sovereign wealth fund, were quoted by newspapers on Monday as conceding that Kuwaiti foreign investments have taken some losses. Oil-rich Kuwait is estimated to have invested more than 260 billion dollars overseas, mainly in the United States and Europe. The officials were quoted as saying losses are minimal.
Kuwait's KSE index closed 2.2 percent lower at 9,889.30 points, dropping below the 10,000-point mark for the first time since March last year. The leading banking sector was down 2.1 percent and investment firms shed 3.4 percent. Market leader telecommunications giant Zain eased 1.9 percent.
The CBK said it stepped in at Gulf Bank after the derivatives deals turned lossmaking because of a decline in the value of the euro against the dollar. The losses will not "affect Gulf Bank's activities (nor) its ability to continue providing its normal banking services," the central bank added. Gulf Bank customers were allowed on Monday to continue making withdrawals in the usual way.
Saudi Arabia's stock market, the largest in the Arab world, dropped for the third day running, shedding 3.5 percent by the close. The Tadawul All-Shares Index (TASI), which had plunged about 11 percent over the past two days, finished at 5,338.68 points, its lowest level in almost four and a half years. Market leader SABIC shed 4.75 percent while the petrochemicals sector as a whole shed 6.7 percent.
The Dubai Financial Market closed 5.8 percent lower at 2,922.66 points, sinking below the 3,000-point mark for the first time in more than three and a half years. Fellow UAE market the Abu Dhabi Securities Exchange declined two percent to 3,321.52 points as the key real estate sector dropped 5.6 percent and banks fell by 3.1 percent. The Doha Securities Market dropped 1.5 percent to finish at 6,792.40 points, while the small Muscat Securities Market ended down 7.45 percent.
Bahrain Stock Exchange shed 2.9 percent. Egypt's CASE-30 stock index bucked the regional picture, closing up 1.23 percent at 4,620 points on Monday, going against the grain of heavy losses on almost all the world's stock markets. The CASE index has lost almost two-thirds of its value since hitting a high of 12,000 points in May.
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