Friday, October 10, 2008

Trouble in paradise?

CAIRO, Oct. 9 -- The oil-rich princes and financial titans of the Persian Gulf went into the week touting their immunity from the financial turmoil of the West, but stock markets in the region ended it posting sharp losses.

Stocks in Dubai, the boomtown of the Gulf, shed nearly a quarter of their value in four days of trading. Saudi Arabia's market, the largest in the Arab world, lost more than 17 percent. In all, the region's seven stock markets by Thursday had lost more than $160 billion in market capital, cutting their value to about $770 billion.

The lessons for Gulf oil states: Billions of dollars in oil surpluses may not be enough to fend off a global recession.

"A very, very horrible week," Mohamed Alami, international desk manager of Naeem Shares and Bonds in Dubai in the United Arab Emirates, said Thursday. "Property developers were just dumped, left, right and center. The prospect of growth for the industry has gone to nil."

At least until this week, the Gulf's building boom outpaced that of China, with $1.3 trillion in projects underway, according to McKinsey & Co., a global management consulting firm. The developers and bankers behind the boom took the hardest market hits this week. In the United Arab Emirates, the market value of firms in the banking and real estate sectors dropped about 40 percent.

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