DUBAI, United Arab Emirates (AP) -- Stocks tumbled across the Middle East on Sunday as most regional markets reopened following the historic downgrade of the United States' credit rating.
The region's markets mostly operate Sunday to Thursday. That meant they were the first to react to credit rating agency Standard & Poor's decision late Friday to cut the U.S. level one notch to AA+ from its top AAA rating. The only exception is OPEC powerhouse Saudi Arabia, which plunged 5.5 percent when it opened Saturday. It failed to significantly recover Sunday. "Clearly there's a negative sentiment prevailing on the global financial markets. We're seeing a strong contagion effect on our markets," said Rami Sidani, the Dubai-based head of Middle East investments for British asset management firm Schroders. The Dubai Financial Market's benchmark index suffered some of the region's steepest declines Sunday, tumbling more than 5 percent in early trading. It closed down 3.7 percent at 1,484 points. While the S&P downgrade weighed on the Dubai market, it was also pulled down by a lower than expected quarterly profit from Arabtec Holding, the Emirati construction giant that helped build the world's tallest tower in Dubai. Arabtec shares fell 6.3 percent to 1.3 dirhams (35 cents). S&P's U.S. cut could shake investor confidence in the world's largest economy and send tremors coursing through global markets. Traders worldwide are eagerly watching to see how far larger and more liquid markets in Asia and Europe react to the downgrade when they open Monday. Financial ministers from the Group of Seven leading economies were preparing to hold a teleconference likely before Asian exchanges open to discuss efforts to stabilize world markets. Other Mideast markets also fell Sunday. The Abu Dhabi and Qatar market indexes each slumped 2.5 percent. Egypt's benchmark EGX30 index fell more than 4 percent. The Egyptian Exchange's head, Mohammed Abdel-Salam, attributed the slide to declines in world markets rather than the fundamental value of the country's companies. Farouk Miah, an analyst at NCB Capital in the Saudi capital Riyadh, said Mideast traders are concerned that debt problems in the West could cut demand for crude and drag on oil-dependent economies in the region. "There's a renewed concern about the U.S. debt situation and the European debt situation," he said. "A lot of people were expecting a downgrade. I think the bigger concern is the oil price falling" because of slumping demand, he added. If the downgrade drives the value of the dollar lower, big Mideast economies such as Saudi Arabia and the United Arab Emirates that peg their currencies to the greenback could also suffer from higher import costs, Miah said. Saudi Arabia's stock market was the only one in the region to open Saturday. The Tadawul's main index edged slightly higher Sunday, creeping up a tenth of a point following the previous day's rout. Miah attributed the small uptick to day traders looking to make a quick profit, not a sign of renewed confidence. He expects Mideast markets to slump further if other global markets tumble on the U.S. debt downgrade. In Israel, the Tel Aviv Stock Exchange delayed the start of the week's first session after pre-market trade showed the benchmark index dropping more than 6 percent because of concerns over the U.S. debt rating cut. Exchange spokeswoman Idit Yaaron said the start was pushed back by 45 minutes "so market players will have time to react logically and not under pressure." The country's benchmark TA-25 index plunged 7 percent to close at 1,074 points. '+'
