TCS Daily

The Saddam Effect

By Jerry Bowyer - December 18, 2003 12:00 AM

There are a lot of people who said that they were disappointed with the performance of the stock market on Monday because they were expecting something that analysts were calling the "Saddam Bounce." The bounce happened, it just didn't happen where and when most analysts were looking. The bounce occurred most markedly in the Middle Eastern stock markets.

This should come as no surprise to readers of ChartWell. In a recent piece ("Heed the Arab Wall Street") ChartWell tracked the progress of equity valuations in the indices based on the largest Middle Eastern and central Asian stock exchanges. The data were very clear: the Iraqi war was good for the region's capitol markets. When the coalition forces did well, markets rose quickly; when the coalition forces found themselves in the middle of a "long, hard slog," stock prices slogged along with them.


The "Saddam Bounce"

How did Iraq's neighbors respond to the news that the man who was formally the head of the Ba'ath party looked more like he should be the head of the long-overdue-for-a-bath party? Answer: by buying stocks. As you can see from the chart above, from last Wednesday to the close of markets today (this article is being written on December 17th) the Egyptian index (CMA) is up 1.3%, the Israeli index (TA-100) is up 4.8% and the Pakistani index (Karachi 100) is down .8%. Of course Pakistani investors might be reacting more to the assassination attempt on their president than they were to the news about Saddam. In addition, although they are not represented on the graph (because historical data is not available), the Iranian index (TEPIX) and the Turkish index (ISE National-100) have both gone up as of today's writing.


In short, in addition to an American Bush Boom, we have a Middle Eastern and Central Asian Bush Boom, too. Regional dictators may have been silent about the capture of Saddam Hussein. But regional entrepreneurs and investors are speaking clearly with their investment decisions. ChartWell expects to see further American progress in Iraq and expects that progress to become not just a source of political reform, but of financial growth for the region as well.


Jerry Bowyer is a radio and television talk show host and the author of the recently released, "The Bush Boom." He can be reached through

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