After a seven-year rally and one of the greatest bull-runs ever seen in an emerging market, the Tadawul All-Share Index (TASI) peaked in late February at 20,635 points. And then it went into decline. Cautionary tales about 'hamours' sharks, or speculators began to circulate in the local press. Banks saw a spike in consumer lending as first-time investors like Said's friend threw good money after bad. In mid-April, after a brief recovery, the correction turned into a rout. By the time the bourse closed at just above 10,000 points on 11 May, the TASI had dropped by more than 20 per cent in just six days. It was the worst week in its history. In less than three months, the market had shed an estimated $350,000 million of its value.

The long-term human and social cost of the crash is harder to quantify. More than

9 million Saudis have invested in shares since 2003, and many of them are on modest incomes. A spate of initial public offerings (IPOs) were seen by the government as a way of redistributing public assets, but most Saudi citizens saw a way to get rich quick. Almost half the population applied in March 2005 for shares in newly launched Bank Albilad, and by the end of the year they were trading at 16 times the offer price. The pattern was repeated with succeeding IPOs (see table). But the huge windfalls on offer tempted many first-time investors to overstretch themselves. When the market plummeted, hundreds of thousands were left stranded.

'As debts rose, families broke up or were left divided in opinion over financial issues,' says Abdulaziz Sager, chairman of the Gulf Research Centre, in a new report on the crash. 'Future dowries were utilised on stock markets, and brides were left high and dry. For many, the debts will take more than 10-12 years to pay off. Cars are being sold off and futures have turned uncertain.'

Victim

Inevitably, heads have rolled. On 13 May, Jammaz al-Suhaimi, the first head of the Capital Market Authority (CMA), was removed from his post by royal decree. It was the sort of dramatic, populist gesture that had long been expected of the government. Newspapers have lampooned the CMA and it has been criticised by members of the Majlis al-Shoura (consultative council) for failing to prevent the downturn. The authority has also come under fire from traders for a number of regulatory moves, including its imposition on 25 February of a daily 5 per cent limit on price movement widely seen as the trigger of the crash.

But in reality, most bankers say there was little the authority could do to prevent the correction. Stocks were hugely overvalued and the market was simply waiting for a trigger. It was the overreaction of speculators that drove the bust, they say, not the regulator's actions. 'The CMA had a huge campaign that came out on television and in newspapers and there were thousands of leaflets distributed to try to create awareness and try to warn people about the risk they are taking in the share market,' says Bank Aljazira chief executive officer (CEO) Mishari al-Mishari. 'It is not fair for people to blame the CMA.'

Nevertheless, the authorities felt a symbolic sacrifice was required. 'In a sense, there had to be a victim,' says Said al-Sheikh, chief economist for The National Commercial Bank (NCB). 'No matter how good he was, or how qualified to do the job, in the end it didn't matter. The government fel