Reports are constantly trying to channel to Western audiences that elusive entity known as “the Arab street.” This frequently cited, but seldom defined, measure of Middle Eastern stability has a pretty dismal record of signaling future events. However, consulting the Arab Wall Street yields a very different view.
The Dow Jones Arabia Titans Index (a basket of 50 blue chip stocks from companies operating throughout the Arab world) has fallen when Hezbollah has been on the attack, and risen on Israel’s counterattacks. This suggests that, despite media and European hand-wringing, the actions of the U.S. and Israel have not been a “destabilizing” factor in the region. Hezbollah was the destabilizing factor: Israel was the solution.
The chart tells the story. Hezbollah’s attack and kidnapping against Israel coincides with a serious sell-off. Hezbollah’s surprise demonstration that it could fire rockets as far south as Nazareth, coincided with a market low. When Israel hit back, the markets staged a mini-rally. When Hezbollah launched 140 rockets in a single day and Israel started losing soldiers in tough ground fighting, the sell-off intensifies. When Israel gets serious, hits Beirut and Tyre, destroys a missile site and captures one of the kidnappers, the market takes off for a huge rally. When Israel and Lebanon agree to a cease fire, stock appreciation slows to more normal levels.
When people talk to reporters or answer opinion polls they may or may not be revealing what they really believe. But when the vote with their nest egg you know what’s really going on inside. By this measure, Israel is one of the best friends the Arab world has ever had.
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