Souk Al-Manakh stock market crash

The Souk Al-Manakh stock market crash was a 1982 stock market crash in Kuwait.

Background

The large revenues of the 1970s left many private individuals with substantial funds at their disposal. These funds prompted a speculation boom in the official stock market in the mid-1970s that culminated in a small crash in 1977. The government's response to this crash was to bail out the affected investors and to introduce stricter regulations. This response unintentionally contributed to the far larger stock market crash of the 1980s by driving the least risk-averse speculators into the technically illegal alternate market, the Souk Al-Manakh. The Souk Al-Manakh had emerged next to the official stock market, which was dominated by several older wealthy families who traded, largely among themselves, in very large blocks of stock. The Souk Al-Manakh soon became the market for the new investor and, in the end, for many old investors as well.

The crash

Share dealings using postdated checks created a huge unregulated expansion of credit. The crash of the unofficial stock market finally came in 1982, when a dealer presented a postdated check for payment and it bounced. A house of cards collapsed. Official investigation revealed that total outstanding checks amounted to the equivalent of US$94 billion from about 6,000 investors. Kuwait's financial sector was badly shaken by the crash, as was the entire economy. The crash prompted a recession that rippled through society as individual families were disrupted by the investment risks of particular members made on family credit. The debts from the crash left all but one bank in Kuwait technically insolvent, held up only by support from the Central Bank. Only the National Bank of Kuwait, the largest commercial bank, survived the crisis intact. In the end, the government stepped in, devising a complicated set of policies, embodied in the Difficult Credit Facilities Resettlement Program. The implementation of the program was still incomplete in 1990 when the Iraqi invasion changed the entire financial picture.

References

v t e Stock market crashes
17th century	Early stock market crashes in the Dutch Republic
18th century	The Mississippi Bubble South Sea Bubble of 1720 Bengal Bubble of 1769 Crisis of 1772 Panic of 1792 Panic of 1796–1797
19th century	Panic of 1819 Panic of 1825 Panic of 1837 Panic of 1847 Panic of 1857 Black Friday (1869) Panic of 1873 Paris Bourse crash of 1882 Panic of 1884 Encilhamento (1890–1893) Panic of 1893 Panic of 1896
20th century	Panic of 1901 Panic of 1907 Depression of 1920–1921 Wall Street Crash of 1929 Recession of 1937–1938 Kennedy Slide of 1962 1973–1974 stock market crash Souk Al-Manakh stock market crash (1982) Black Monday (19 October 1987) Rio de Janeiro Stock Exchange collapse Friday the 13th mini-crash (1989) Japanese asset price bubble crash (1990–1992) Black Wednesday (16 September 1992) 1997 Asian financial crisis October 27, 1997 mini-crash 1998 Russian financial crisis
21st century	Dot-com bubble (2000–2002) 9/11 stock market crash (2001) Stock market downturn of 2002 Chinese stock bubble of 2007 U.S. bear market of 2007–2009 2007–2008 financial crisis 2009 Dubai debt standstill European debt crisis (2010) 2010 Flash Crash 2011 Tōhoku earthquake and tsunami stock market crash August 2011 stock markets fall 2011 Bangladesh share market scam 2015–2016 Chinese stock market turbulence 2015–2016 stock market selloff Brexit stock market crash (2016) 2018 cryptocurrency crash 2020 stock market crash