Gulf stocks plummeted across the board this week as investors weighed the impact of the downgrading of US credit by the Standard and Poor's rating agency (S&P), financial analysts said Friday. Analysts expected regional markets to be volatile in the coming weeks pending a clarification of the 'ambiguity' that surrounded the US and European economies. Saudi shares spearheaded the regional plunge this week, led by the petrochemical sector which stood a high chance of bearing the brunt of an expected shrinkage in demand for oil and petrochemical products due to fears of a double-dip world recession. The Tadawul All Share Index (TASI) of the Arab world's largest stock exchange sank 6 per on a weekly basis, closing at 6,039.32 points. "What happens now is a struggle for liquidity, be it in global or emerging markets," Saudi analyst Mohammad Anqari said. "The situation is foggy and everyone wants to know what is going to happen in the US and European economies," he added. Anqari said the Saudi petrochemical sector "which is completely linked to the global economy" would be the key loser from any stagnation in the world's major economies. He expected the Saudi market to remain "flat" above the 6,000-point level pending the emergence of fresh moving factors. Anqari expected ambiguity to dominate the global economic situation for a period of between 4 and six weeks. "The global crisis is developing into a crisis of states, which could slide to the worse," he said. Kuwait's KSE all-share index fell 3.55 percent this week due to the US downgrade, to close at 5,851 points. Kuwaiti analyst Amer Tamimi expected negative fallout from the US downgrading on Kuwait in terms of lower oil prices and a weaker dollar. "Our markets are obviously following the volatility of global markets," Ahmed Talhaoui, the Abu Dhabi-based head of investment at Royal Capital PJSC, said. "Local markets are entirely at the mercy of the global risk aversion." The benchmarks of the United Arab Emirates stock markets of Dubai and Abu Dhabi also plunged 5 percent and 3 percent on weekly basis, to close respectively at 1,464 points and 2,589 points. Qatar's index sank 4.5 percent, closing the week at 8,107 points, while Bahrain's benchmark closed 1.15 percent in the red, at 1,266 points. "In addition to the global backdrop institutional investors in particular see few domestic drivers," said Julian Bruce, equity sales head at EFG-Hermes Holding SAE in Dubai. "Recent earnings releases have been fairly moribund." Reprieves for Egyptian stocks proved to be short-lived Thursday, as net-selling of high-caps hobbled the market for the fourth and final time this week, the benchmark EGX30 sliding a further 1.49 percent to 4,592 points. The bourse's main index saw a 4.1 percent upswing on Wednesday, having fallen to its lowest level in 28 months over the previous three days in response to global economic turmoil. "We have a saying, no stock can beat a bad market and that's what we are seeing here," said Issa Fathy, vice president of the securities division at Cairo's Chamber of Commerce. "The Egyptian market is following markets around the world, although the correlation is more due to psychological factors - it's not objective." The all-share index of the Amman Stock Exchange (ASE) lost 2.73 percent on weekly basis, closing at 2,014 points. Egyptian shares were the largest loser this week due to the downgrade repercussions. Egypt's AGX 30 index, which measures the performance of the market's 30 most active stocks, plummeted 8.3 percent, closing at 4,592 points. Investors will be appraising the exposure of the Arab economies, particularly in oil-rich Gulf region, to the fallout of US credit rating downgrade. ? SG/Agencies __
