KUWAIT CITY, October 14 – Stocks in oil-rich Arab states in the Gulf surged on Tuesday for the second straight day, bolstered by government action to shore up the banking sector and a spectacular global market rally.
The Saudi bourse, the largest in the Arab world, shot up by 6.2 percent at the opening, with the Tadawul All-Shares Index (TASI) surging about 400 points to trade at 6,761.00 points.
The TASI shed 23 percent last week and on Saturday but it rebounded strongly on Monday, rising 9.5 percent, bolstered by the leading petrochemicals and banking sectors.
The bourse in the booming emirate of Dubai led the gains in earlier business, leaping almost 10 percent at the opening before retreating slightly to be 7.8 percent higher at 3,604.50 points.
The other UAE bourse, the Abu Dhabi Securities Exchange, rose 7.2 percent to 3,592.76 points. Both bourses were bolstered by the key real estate sector, which rose almost 10 percent in both Dubai and Abu Dhabi.
Tuesday\’s surge came after the United Arab Emirates said it had made another 19 billion dollars available for local banks, the latest measure to try to combat liquidity problems arising from the global financial crisis.
The move brings to 32.6 billion dollars the total amount being offered by the UAE monetary authorities to meet the needs of local banks.
In Oman, the Muscat Securities Market was up seven percent, while the Kuwait Stock Exchange, the second largest Arab bourse, rose by just about one percent.
It was the only Gulf market to drop on Monday, when all other bourses in the region bounced back sharply after last week\’s dramatic freefall.
The UAE and other governments in the Arab states of the Gulf have taken a series of measures in the past few days to shore up the financial system that suffered under the global financial meltdown.
Oil powerhouse Saudi Arabia, Kuwait, UAE and Bahrain have slashed interest rates and pledged tens of billions of dollars of liquidity to domestic banks.
On Tuesday, the official WAM news agency in the UAE said 70 billion dirhams (19 billion dollars) had been earmarked for the banking sector.
"This brings to 120 billion dirhams (32.6 billion dollars) the amount of funds made available to strengthen liquidity in the national banking sector in less than a month," it added.
On September 22, the UAE central bank set up a 13.6-billion-dollar facility to help banks cope with the crisis and said it might make more money available if needed.
The government on Sunday said it will guarantee deposits and savings in local banks to protect depositors in face of the global financial turmoil. The move also covers foreign banks with "significant operations" in the country.
Last week, the UAE central bank also slashed its lending rate to banks to three percent and its benchmark rate by 0.5 percentage points to 1.5 percent in a move to boost market liquidity.