Dubai's benchmark stock index closed sharply lower on Monday while other exchanges in the oil-rich Gulf also tumbled, reflecting investor panic over the unrest that has ravaged the Arab region for weeks and shows no signs of abating.
The Dubai Financial Market closed 3.83 percent lower, hitting 1,410 points, and dragging the year-to-date losses to over 13 percent. The benchmark had dropped almost 0.9 percent on Sunday with the violence in Libya, as Moammar Gadhafi, the country's leader, struggled to remain in power.
"Outside of Libya, it is the fate of other regional oil producers that will continue to preoccupy global markets. In particular, any change to the perceived threat to production in Saudi Arabia, which for now remains secure, will remain of crucial importance," said international brokerage giant Nomura in a research note. "For now, the barometer of political risk for Gulf oil producers will likely remain centered in Bahrain."
"And there, pressures do not appear be cooling, even as protests remain peaceful," Nomura said.
The cost of insuring the debt for many of the Arab nations where protests were continuing climbed on Monday, reflecting default concerns.
Reform calls are also gaining momentum in Saudi Arabia, home to the world's largest proven reserves of conventional crude. Investors are worried that demonstrations in the OPEC kingpin could undercut global crude supplies and send prices, already climbing, into stratospheric levels.
The Saudi All Shares Index sharply pared losses earlier in the day, and was down 0.15 percent to 5,941 points near the market's close. The TASI had fallen 5 percent on Sunday in a plunge that had some investors asking for the government to step in an either shut down the exchange or at least limit its hours of operation.
After being initially limited in the Gulf region to Bahrain, the unrest that has ravaged the Arab world spread to Oman and opening a new front of protests on Saudi Arabia's doorstep.
Oman's benchmark stock index closed down almost 4.9 percent, or at 6,142 points, as protests continued for the third day. In the oil rich emirate of Abu Dhabi, the main index closed down 1.50 percent to 2,508 points while Qatar's benchmark was off just shy of 3.2 percent to 7,932 points.
Already, the anti-regime demonstrations that began in Tunisia have toppled the leaders of that North African nation and Egypt, while also spreading to Libya, Iraq, Yemen and Bahrain. The unrest has led to downgrades of several of the Arab countries' sovereign ratings by all three major ratings agencies and has boosted the cost of insuring their debt.
The five-year credit default swaps for Egypt, Saudi Arabia, Lebanon, Tunisia, Bahrain and Morocco all widened on Monday. Financial data provider CMA said Egypt 5-year CDS was up 2.6 percent to almost 364 basis points while Bahrain was at 299, up almost 2.2 percent. Saudi Arabia's was up 3.45 percent to almost 140 basis points.
Egypt's stock exchange, which has been closed for over a month as protests that ultimately unseated Hosni Mubarak from the presidency unfolded, was set to resume operations on Tuesday. But protesters have massed in front of the exchange, calling on the country's prime minister to keep the bourse closed as they worry that the market could collapse amid continuing unrest in the region.
Egypt's new military rulers have been pushing to restore some semblance of normalcy in the country. But repeated labor strikes, coupled with continuing pressure from activists calling for swifter reforms, have maintained a level of uncertainty in the Arab world's most populous nation.
Egyptian Exchange authorities have set up measures aimed at preventing a collapse, including stopping trade should the broader EGX100 index experience 5 or 10 percent shifts.
They have also ordered brokerage firms to verify the identity of those individuals on whose behalf they execute trades, a clear reflection of broader worries in the country that businessmen who have had their assets frozen may try to find alternate routes to freeing up their money.
But it remains unclear whether such efforts will be enough to boost confidence in the market when other indicators paint a daunting picture for Egypt's road to economic recovery after the 18 days of unrest that toppled Mubarak.
Egyptian state television reported Monday that authorities had instituted a travel ban against Mubarak and his family and ordered their funds seized. The step was the latest accountability measure targeting top officials and powerful businessmen who may have abused their positions within government to amass fortunes.