The political contagion hitting Gulf stock markets is starting to look like a plague. There was no end to the selling on local bourses on Wednesday, with Dubai’s DFM index falling 3.5 per cent to its lowest level since 2004 and Saudi Arabia’s Tadawul index down 2.6 per cent.
Local investors are leading the way, fearful that the political uphevals seen in Tunisia, Egypt and Libya could be repeated in the oil-exporting Gulf. And with reports from Libya of government forces attacking opposition-held locations, those fears seem unlikely to subside any time soon.
“A lot of the selling has been from onshore, local and regional investors; the speed of the decline tells you it’s pure panic,” Dubai-based Ibrahim Masood, of Mashreqbank PSC, told Bloomberg. “On balance, I suspect that a few months down the road these levels would look like a steal.”
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