When Kuwait’s government – under pressure from irate, day-trading citizens – announced late last year that it would support domestic equity prices, a Kuwaiti banker observed ruefully: “Moral hazard doesn’t exist in the Gulf.”
Oman would seem to agree. Last week the government announced it would proceed with an OR150m ($389m) stock market stabilisation fund to offer succour to the Muscat Stock Exchange, which lost 41 per cent last year.
Qatar also decided to intervene last year – albeit in a roundabout way. The Qatar Investment Authority, the country’s sovereign wealth fund, said it would buy stakes of up to 20 per cent in all the country’s banks through fresh share sales, thereby injecting extra capital for lending and extending its gold-plated sovereign guarantee across the sector.
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