Stock Fever Abates As Saudi Market Falls

Unidentified Saudi men stream out of a bank in Khobar, Saudi Arabia, on Sunday, Nov. 12, 2006. Many Saudis who invested all their savings in their high-flying stock market during the past few years have lost substantial sums in what analysts say was a predictable correction _ and an important, if painful, lesson. (AP Photo/Hasan Jamali) (Hasan Jamali - AP)

RIYADH, Saudi Arabia -- Caught in the fever of Saudi Arabia's booming stock market, Rashed al-Subaie sold his two cars and some land, hoping to double his $46,000 capital _ a reasonable expectation then.

The market, fueled for nearly three years by rising oil prices, had become a national obsession that was as close to gambling as one can get in a kingdom that bans it. But a sudden downward spiral in the market in March wiped out gains for thousands of Saudis like al-Subaie, and recently, things have only gotten worse. In the past couple of weeks, the index has tumbled about 3,000 points _ close to 2004 levels.

"It was painful, but I was lucky. I still have a roof over my head and I have no debts," said the 36-year-old IT manager, whose capital was down to $35,000 when he withdrew his money a few months ago.

The downturn, which saw the market's index drop from a record peak of 20,634 in late February to 8,019 at opening Sunday, has been disastrous for many Saudis.

People collapsed in trading halls while witnessing their money evaporate. At least four investors died of heart attacks, according to the Saudi media. In one case, a man shot and killed his friend during an argument over how to invest their money, the Al-Riyadh daily reported.

Saudis who quit jobs to focus on playing the market are now jobless and in debt. Grooms who had hoped their investments would cover their wedding expenses were left with a fraction of their savings. Fathers who sought to double their daughters' dowries are now penniless.

"Lands sold, jobs lost, weddings postponed and money evaporated in the virtual market," said a recent headline in Al-Madinah newspaper above a picture of empty seats at what used to be packed trading rooms.

In one instance, a high-school principal was so incensed after losing an undisclosed sum of money in the market that he banned the use of red ink by teachers to grade papers, according to the daily Okaz. Instead, he ordered that all papers be marked up in green ink _ the color used to indicate rising stocks.

The collapse took many Saudis by surprise. Until February, the market was growing by almost 100 percent annually, leading many Saudis to predict a new boom similar to that fueled by oil in the 1970s. The growth attracted millions of Saudis, raising the number of investors from about 50,000 six years ago, to about 13 million last year. At least 2 million of them were active investors.

The issue became such a problem that even the grand mufti, Sheik Abdul-Aziz Al-Sheikh, called on office workers to stop dealing in the stock market during working hours, according to Al-Madinah newspaper.

"It is a breach of trust for workers to spend their office hours selling and buying shares through the office Internet," Al-Sheikh said, according to a translation in Arab News daily.

The stock market run began in 1999 when the number of companies going public increased sharply. But it really took off in 2003 when oil prices started climbing, eventually more than tripling to over $70 a barrel.