Mideast stocks may be weak on militant attacks, Greece

DUBAI - Middle East stock markets may be weak on Sunday because of the militant attacks in Kuwait and Tunisia that killed a total of 66 people last week, and concern about the Greek debt crisis.

The mosque attack in Kuwait is unlikely to have any significant impact on the Kuwaiti economy as long as oil exports continue, but the security breach may at least temporarily dampen sentiment among the retail investors who dominate the stock market.

The killing of 39 tourists in Tunisia is expected to seriously damage its economy in coming months, by stifling the tourist industry. Tens of thousands of foreign tourists are being evacuated from the country.

After the Bardo museum attack in Tunis last March, which killed 23 people, the Tunisian stock index immediately fell 2.5 per cent.

It began recovering the next day to regain its pre-attack level within three weeks. This time, however, any recovery may be slower as the latest attack, on a Tunisian resort area previously considered safe, may do more lasting damage to tourism.

The decision of European Union governments to refuse funding to Athens appears to make a Greek debt default likely and increase the chances of Greece leaving the euro zone.

While global markets have been preparing for a Greek exit for years and could probably now cope with one, and Gulf markets are fairly well insulated from global contagion by heavy government spending, global equity and oil prices might fall, and this would affect Middle East bourses.

One stock that may attract buying on Sunday is Saudi Arabia's Kingdom Holding, which said at the weekend a group of French firms led by a state-backed investment fund had agreed to invest at least $150 million in it.

Kingdom has a stock market value of about $22.5 billion, implying the French will buy a stake of only about 0.7 per cent, but the deal may be seen as opening up new opportunities for it.

Purchase this article for republication.



Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.