Tel Aviv Stocks Slump After Weekend of Egypt Riots

Foreign investors pull out of their investments in the Mideast and are selling stocks and shekels fast, resulting in climbing dollar rates and oil prices.

The Tel Aviv stock market slumped Sunday as images of escalating violence and chaos in Egypt gripped investors and raised concerns the protests would spread across the Middle East.

Foreign investors have pulled out of their investments in the region and are selling stocks and shekels fast, resulting in TA-25 dropping 2.7% to rate of 1296 points, and TA-100 fell 3% to 1202 points. The Banks-5 index fell 3.4% and the Real Estate-15 index dropped by 5%.

Tel Aviv Stock Exchange
Guy Raivitz

Following Friday's trend, the dollar continued to climb by 0.8% reaching an exchange rate of NIS 3.71.

Stock prices already have dropped sharply over the weekend, while oil prices rose 4% due to concerns that protests could spread to Saudi Arabia, he said. The oil price increase is even sharper in shekel terms, since the shekel is depreciating due to both the central bank's measures to depress it - imposing more conditions on foreign traders - as well as the geopolitical risk Israel faces due to the protests next door.

The events in Egypt are increasing the uncertainty in the Middle East, and could be used as an excuse to trigger a sell-off after months of gains, analysts said yesterday.

Analysts were busy updating their predictions for the dollar, oil, gas, gold, the Israeli stock market and the Israeli bond market, in the wake of the spreading Egyptian protests.

Egypt's stock exchange will remain closed on Monday after having also been shut on Sunday amid protests demanding that President Hosni Mubarak step down, an
exchange official said.

The losses, led by a drop of more than 4 percent in the business hub of Dubai, reflect concerns the unrest that has roiled the Arab world's most populous country and nearby Tunisia could spread, jeopardizing the economic recovery across the region.

"There's this contagion effect, where investors are thinking: Well, is this going to spread out across the Arab world?" said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a fund management firm in Dubai.

The benchmark index for the Dubai Financial Market tumbled 4.3 percent to close at 1,543.02.

Among the biggest losers in Dubai were real estate developer Emaar Properties, the builder of the world's tallest tower, which sank 8.3 percent to 3.11 dirhams (85 cents). Shares of discount carrier Air Arabia, which is growing its operations in Egypt, dropped 6.1 percent to 0.79 dirhams (22 cents).

Abu Dhabi's main index sank 3.7 percent to close at 2,561.06.

Shares of the exchange's biggest loser, Emirati natural gas producer Dana Gas, plunged 9.9 percent to finish at 0.64 dirhams (17 cents) despite assurances that its Egyptian operations haven't been stopped amid the protests.

Dana Gas Egypt is continuing with routine operations, and the production has not been affected by the current events in Egypt, CEO Ahmed al-Arbeed said in a statement.

Most other regional markets also fell.

Kuwait shares dropped 1.8 percent to close at 6,822. Qatar's benchmark index slumped 3 percent to 8,709.77.

Saudi Arabia was the only major market to post gains, but they fell short of offsetting steep losses the previous day. The kingdom's Tadawul All Shares Index was up 2.5 percent to 6,425.39 in afternoon trading Sunday.

Saudi shares fell 6.4 percent to close at 6,267 points on Saturday, when it became the first major Arab market to reopen for business following widespread Egyptian protests that intensified Friday.