The Saudi Arabian stock market Bubble in 2006 Causes and Affects

(2006 BUBBLE

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SAUDI ARABIAN STOCK MARKET (2006 BUBBLE Name

Class

Subject :INTRODUCTION

The Saudi Arabian Stock Market established in 1985 and become one of the biggest markets with sound capitalization like other major markets such as Korea , Russia and China . The situation continued till 2005 . Even the Saudi government encouraged citizens to participate in the stock market so that they can share the benefits of the country 's property . In such circumstances , the citizens purchased the series of Initial Public Offerings by borrowing money to have large

investments . Not only borrowing , they obtained loans from banks providing collateral securities and made investments on the stock market . Many reasons with the stock market crash which includes involvement of large portions by institutional investors such as governments , controlling families , etc DESCRIPTON

The points in Saudi stock market i .e . Tadawul raised from 2 ,500 to 20 ,000 in three years and at last drop to 8 ,019 during the beginning of February , 2006 happened on Riyadh 's Black Monday . It was a classable bubble . Unfortunately the middle class Saudis became victims whereas institutional investors were under safe mode . The year of 2006 remembered as a watershed for Saudi Market . Though many thousands of people gained through stock market , yet many more thousands of people lost their substantial savings

At the year end of 2005 , the Saudi Storm Market Tadawul Index represented 16 ,712 whereas it was only 8 ,158 in the year of 2004 . During 2006 , the index touches even...