Yesterday EconPundit Steve Antler noted that
- Middle Eastern countries have stock markets.
- They’re crashing.
- Investors in those countries aren’t happy about it.
(Steve’s post includes many links)
So, what’s going on? For insight I turned, of course, to John Chilton, the Emirates Economist, who, sure enough, had a post on that very subject. John suggests a couple of reasons for the tumble:
- Recent events on the world stage that call the value of of ME companies into question.
- An institutional environment that encourages excessive risk.
Lo and behold, I turn to Glenn Reynolds this morning and what to my wondering eye does appear but a post noting the rise in the U. S. stock market. Glenn also asks, reasonably, why the rise is unremarked upon. He might well have wondered why the decline in ME bourses went similarly unnoticed.
May I venture that these things may be related? As the U. S. market rises, foreign investors may be more inclined to sell their local investments and invest in U. S. companies. Or, as local markets decline the U. S. may look like a safe harbor.
I don’t see this as an unalloyed blessing but whatever.
The blogosphere is a wonderful place. There’s an old rabbinic saying: “The wise man know everything; the shrewd man knows everybody.” Nowhere is that more true than the blogosphere.
UPDATE: collounsbury notes that it’s the Gulf markets that are crashing rather than Arab bourses generally.