May 15, 2006
Saudi index soars after removal of regulator
There's a title you just do not read every day in finance.
Regulator. Removal. Index. Soars.
No, just a string of words that do not typically strike one as going together.
It's the very really. Soars. No, indices just don't typically soar on such news.
But we are talking here about KSA and it's strange little fantasy world of hydrocarbon income fueled pretend economics.
However, before moving along, I would draw attention to a fine book I am perusing The (Mis)Behaviour of Markets : A Fractal View of Risk, Ruin and Reward , very much worth consideration.
It merits a quick look, if you will.
Our man Wallis again conveys some of the surreality that is KSA markets (any KSA markets)
So, the ignorant bedou jouj sifr gits have gotten themselves all excited at the prospect of being bailed out, as the common view has it markets only go up, and if they do not, government should step in and share the risk, all Islamic style.
Well, perhaps a bad joke based off of my near contempt for some of the underlying hypocrisy of people involved.
Regardless, we learn that an ex IMF man (well rep to IMF, might have spent all his time whoring or could be brilliant, name doesn't ring a bell)
Saudi Arabia’s King Abdullah announced on Friday the appointment of Adulrahman al-Tuwaijri, a former International Monetary Fund representative and head of the Supreme Economic Council, to take over the Saudi Capital Markets Authority (CMA).
And why?He replaced Jammaz al-Suhaimi after the Arab world’s largest market lost nearly half its value in three months – $400bn (€309bn, £212bn) – ruining tens of thousands of Saudis who, with little access to reliable information on the true value of companies, borrowed heavily to acquire stocks at wildly inflated prices.
Well, zero transparency, huge crapshoot in a country where it is fucking hard to do anything the least bit interesting.....
What does one get?
Massive gambling.Having encouraged the general population to ride the market as a means of accessing wealth generated by the oil boom, the Saudi authorities have come under strong pressure to intervene to halt its subsequent collapse. Analysts described the appointment of Mr Tuwaijri as a confidence-building measure. But they warned that alone it would not stabilise a market in correction.
Typical Saudi public economic policy. The entire fiasco.At its peak in February, market capitalisation of the Tadawul All-Share index was driven to unsustainable highs worth nearly 200 percent of national gross domestic product.
One must confess that perhaps, at some point, a real market regulator might have stepped in.
But then KSA market is not a real market.“The decline in blue-chip stocks has caused distress which has affected millions of citizens,” Mr Tuwaijri said on al-Arabiya satellite television news in his first comments following his appointment.
“I hope to see organised and balanced trading where the CMA plays its desired role, which inspires confidence,” he added.
Hmmm, on al Arabiyah....
Well, in any case, the market has to come down. Does he talk it down slow, or is the government going to do the typical Saudi thing and piss away billions on idiocy - say like trying to support unrealistic prices?.....The United Arab Emirates markets also recovered in weekend trading. It was partly in response to the Saudi recovery and partly, analysts said, on rumours that senior officials instructed banks to stop liquidating their share portfolios and were now deciding whether to alter regulations to allow share buy-backs by listed companies.
UAE intervening too.
Such transparent markets.
The Saudi market is closed to foreign investors outside the Gulf, except through a limited number of funds. But Saudi investors have spread their own investments across the Arab world, giving the Tadawul All-Share index influence over other markets.
This last bit, re Saudis spreading their investments is crap by the way. Money has clearly gone into neighboring markets, but the Maghreb has not seen much. Well again, a reminder the Maghrebines only count when somene in Dubai wants to inflate market numbers.
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Immediately after the major mid-April crash, the government intervened to prop up the market using- and you must pause here to appreciate that it takes a special kind of wise planning and foresight to make this sort of thing possible- the national pension fund, and also by telling at least 3 top banks to intervene.
Posted by: dubaiwalla at May 15, 2006 11:18 AM
"jouj sifr" ... what does that mean?
Posted by: Ali K at May 15, 2006 04:33 PM
Schnou Akh Ali, maktegdersh fahim l-maghribiyah?
Posted by: The Lounsbury at May 15, 2006 05:53 PM
is it double zero? but what does that even mean?
Posted by: Ali K at May 15, 2006 07:07 PM
Bingo, make you a Maghrebi yet.
Double zero, it's an insult, empty heads... Get it? Based off of the traditional headress back east. As you know, they don't wear that kind of outfit out West.
I do so love infantile inter-regional put downs. They make life more fun.
Posted by: The Lounsbury at May 15, 2006 07:43 PM
I was watching the business news on Al Jazeera and yesterday there was obviously some sort of corrective movement in the Saudi exchange. Most of the stocks fell by at least 10%. They droned on and on about it and I am an economic idiot, but anyhow, for what it is worth, that is what I got out of it.
Schnoo ahwalak right now? Do your bones still hurt etc? (heh heh, how do you like my great Daraja (tunsi) = bet you thought I was too Cairene to remember it - but Maghrei is still a closed book to me).
Posted by: Anna_in_Cairo at May 17, 2006 06:01 AM
Yes, still have bone pain. Just had a round, side effects, have to have this looked at. Apparently my tolerance of toxic chemicals is wearing thin.
Still, not dead and no massive tumour trying to kill me. Just some residual crap there to torture me.
Posted by: The Lounsbury at May 18, 2006 12:35 AM
Posted by: dubaiwalla at May 30, 2006 07:01 AM
When are we hearing from you officially next?
BTW, am slated to come to Dubai in the Fall, bit after Ramadan starts (if the cancer is wrapped up). No speed shopping though.
Word on the street has it you may come here to the US of A as well. Looking forward to hearing more.
As well as some Khalije commentary from ya mate.
Posted by: The Lounsbury at May 30, 2006 07:22 AM
I was telling our Editor-in-Chief that I ought to do a post on elections in Kuwait, we've not had any discussion on that. Check your 'Aqoul email in a bit for details about my travel plans.
Posted by: dubaiwalla at May 31, 2006 09:13 AM
Mixed metaphors ("It was a rat race with a sheep mentality.") and other comments about the stock market collapse here. Somewhat frighteningly, it ends like this:
Another six months and everyone will be running to invest once again in the Market.
Posted by: dubaiwalla at June 19, 2006 09:39 AM