Egypt President Mohamed Mursi decree issued on Thursday that defends his decisions from judicial review, set off street violence and unravelled efforts to restore stability after last year’s revolution. Cairo’s index plunged 9.6 percent.
Investors are concerned Egypt’s political unrest could have widespread implications for the Middle East.
“The market was already under pressure from the violence in Gaza and now it’s Egypt’s protest,” said a Riyadh-based trader who asked not to be identified.
Israel and Gaza called a truce on Wednesday, following eight days of violence, which triggered a sell-off across regions and weighed on markets.
Saudi’s heavyweight sectors - petrochemicals and banking - were the main drag. Saudi Basic Industries Corp (SABIC) , the world’s largest chemicals producer fell 2.3 percent. Al Rajhi Bank dropped 1.2 percent and Samba Financial Group shed 2.2 percent.
The kingdom’s index dropped 2.1 percent to its lowest close since Jan. 25 and marked its biggest one-day loss since early June.
“The index broke the key support of 6,550 sharply to the down side,” said Mohabeldeen Agena, head of technical analysis at Cairo’s Beltone Financial. “We are expecting the bears to continue pushing it downward towards 6,300 levels.
In Dubai, property stocks helped lift the index, which gained 0.3 percent, after plans announced for a new mega project in the emirate.
Dubai’s Emaar Properties climbed 2.2 percent, Drake & Scull added 0.6 percent and builder Arabtec rose 1.3 percent.
The emirate’s ruler on Saturday unveiled a master development that appeared to include re-starting projects that were halted following a property price crash.
“Real estate stocks are back on the move with Dubai’s plans,” said a Dubai-based analyst who asked not to be identified.
“This not only gives the market a signal that strong demand is back on track but also a positive push to market sentiment and appetite for these highly liquid stocks.”
Abu Dhabi’s Dana Gas climbed 5.1 percent, the most active stock on the index. The natural gas producer, in talks to restructure a $920 million Islamic bond, is offering bondholders cash and an average 8 percent coupon on two new sukuks to replace the existing one, two sources said.
In Kuwait, the index slipped 0.2 percent from Thursday’s five-week high as retail investors booked recent gains.
“It was a seller’s market with retail investors making a quick buck - people were buying again into small and big-cap stocks which is a good sign,” said Fouad Darwish, head of brokerage at Global Investment House. “They believe the momentum will continue.”
The market has gained around 4 percent since slumping to an eight-year low hit on Nov. 4, in part due to state-linked funds buying bluechip stocks to stabilise the market.
Dawish said this buying was muted on Sunday as the market held its ground.
Kuwait’s emir, Sheikh Sabah al-Ahmad al-Sabah, said earlier this month he would deal with political problems and revive the economy.
Elsewhere, Qatar Navigation jumped 6.4 percent after the company said it scraped plans for a 20 percent capital increase. Doha’s benchmark rose 0.5 percent to its highest close since Nov. 15.