Dubai’s benchmark

Middle East shares continue to slump, sending Dubai’s benchmark stock index down the most this month, on concern political unrest in the region may spread and also the fact that OPEC have failed to control crude prices in the $85 per barril range,allowing speculation to once more affect the market.
Emaar Properties PJSC, builder of the world’s tallest skyscraper, dropped 4.7 percent. Dubai Islamic Bank PJSC, the United Arab Emirates’ biggest Shariah-compliant lender, fell the most since November.
The DFM General Index retreated 3.7 percent, the most since Jan. 30, to 1,536.45 at the 2
p.m. close in Dubai. Kuwait’s gauge tumbled 2.5 percent, led by Mobile Telecommunications Co. as the company’s board rejected all purchase offer for its 25 percent stake in Zain Saudi Arabia.

Arab governments are cracking down on pro-democracy activists as uprisings that toppled leaders in Tunisia and Egypt spread to Libya, Algeria, Yemen and Bahrain. Prince Talal Bin Abdul Aziz, a member of Saudi Arabia’s royal family, said on Feb. 17 that the kingdom may see protests unless King Abdullah Bin Abdul Aziz introduces reforms, according to BBC Arabic TV.
The spread of the geo-political tension into Bahrain is causing investors to be risk averse,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.

Bahraini protesters were considering the government’s offer of talks to resolve a conflict now in its seventh day as a Libyan opposition group warned of a “bloodbath” at the hands of security forces seeking to crack down on calls for political change sparked by Egypt and Tunisia.

Bahrain’s credit default swaps climbed 17 basis points to 304, the highest since July 2009 on Feb. 18, according to CMA prices in London. The cost of protecting Saudi Arabian debt against default for five years soared 12 basis points to 138, also the highest in 19 months. Swaps on Saudi Arabia are used as a measure of confidence in the country although they reference
no debt. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.