Kuwaiti shares tumbled, sending the benchmark index to the lowest level since 2004, amid investor concern that European and U.S. debt crises may hurt the country’s international investments.
Kuwait Finance House, the nation’s largest investment bank, slumped the most since December 2009 after reporting a 43 percent plunge in second-quarter profit. National Bank of Kuwait, the country’s biggest lender, fell 5.3 percent.
The benchmark SE Price Index declined 1.6 percent to 5,973.1, the lowest since September 2004, at the 12:30 p.m. close in Kuwait City. The measure has lost 14 percent this year.
“The Kuwaiti government has a lot of investments in the U.S. and needs a quick solution to avoid another 2008 crisis,” Khalid Bonashi, manager of retail sales brokerage at NBK Capital in Kuwait, said in a telephone interview. “Nevertheless, the region, and Kuwait in particular, is in a better and more comfortable position than others.”
Kuwait, a member of the Organization of Petroleum Exporting Countries, through its sovereign wealth fund has stakes in companies including Citigroup Inc., Bank of America Corp.’s unit Merrill Lynch & Co., BP Plc and Daimler AG. Concerns that Europe’s debt crisis is spreading to Italy and Spain, as well as wrangling between U.S. President Barack Obama and Republican lawmakers over raising the country’s debt ceiling has roiled global markets over the past week.
Stocks fell around the world Monday, led by banks, while the euro weakened to a record against the Swiss franc as stress tests failed to allay concern the debt crisis will deepen. The MSCI All-Country World Index slid 0.5 percent at 5:11 p.m. in Dubai and the MSCI Emerging Markets Index lost 0.9 percent.
In Kuwait, a capital markets law that places restrictions on investment funds is also weighing down on shares, Bonashi said. The law stipulates that investment funds may not own more than 10 percent of a publicly traded company, or invest more than 10 percent of the fund in one company.
Kuwait Finance House tumbled 5.2 percent to 910 fils. National Bank of Kuwait slumped to 1,080 fils.
In the United Arab Emirates, Abu Dhabi shares dropped the most since March as Emirates Telecommunications Corp., the phone company known as Etisalat, posted profit that missed the analysts’ estimates.
The ADX General Index retreated 0.9 percent, the most since March 31, to 2,707.23. Dubai’s gauge lost 0.8 percent. Etisalat fell 1.4 percent to 10.90 dirhams. Second-quarter net income dropped 15 percent to 1.59 billion dirhams ($434 million). The median estimate of three analysts was for a profit of 1.86 billion dirhams, according to data compiled by Bloomberg.
“Investors are taking their cue from Etisalat numbers,” said Ibrahim Masood, who helps manage about $400 million at Mashreqbank PSC. “That seems to be spilling over into some selling across the board.”
The Bloomberg GCC 200 Index retreated 0.9 percent. Qatar’s gauge slightly declined 0.5 percent and Saudi Arabia’s Tadawul All Share Index fell 0.6 percent. Oman’s MSM30 Index was little changed while Bahrain’s measure gained 0.1 percent.