As political unrest continues to sweep across the Arab world, not only leaders and their regimes are falling. The uncertainty in the political sphere is leading to uncertainty in the financial arena, sending shares in the Arabian Gulf downward, and pushing Dubai’s benchmark stock index into the dumps for the majority of the month of February.
Prince Talal Bin Abdul Aziz, part of the Saudi royal family, warned last week that if his kingdom , under the rule of King Abdullah Bin Abdul Aziz does not introduce political and economic reforms, the protests could reach Saudi Arabia.
The stock of the company which built the world’s largest skyscraper, Emaar Properties, lost 2.5% so far this month; while the Dubai Islamic Bank fell to its lowest level in a week. The DFM of Dubai plummeted 1.9%, the largest loss since January 30.
“The spread of the geo-political tension into Bahrain is causing investors to be risk averse,” said Nabil Farhat, partner at Abu Dhabi-based Al Fajer Securities. “The risk of spreading is dependent on each country’s situation. If you have a country with high inflation, an autocratic regime, high unemployment and a big percentage of the population that is below the poverty level and young, then the risk is high.”