Gulf stocks take a tumble with oil at seven-year low

Published December 14th, 2015 - 06:30 GMT

Stock markets in the GCC plunged on Sunday on a broad sell-off by investors, rattled by oil price crash to a seven-year low amid little signs of a pick-up in Chinese growth and the prospect of a US interest-rate increase this week.

Brent crude posted its biggest weekly percentage drop in over a year on Friday to settle at $37.93 after the International Energy Agency warned that global oversupply of crude could worsen next year.

While Dubai's bourse fell 2.1 per cent, the region-wide retreat was led by Qatar's stock index. With the latest fall, Dubai's benchmark DFM General Index was down 23.6 per cent in 2015, making it the worst-performing Gulf market index this year.

On Sunday, Qatar's stock index tumbled 3.7 per cent, taking its losses for the year to 21.2 per cent, underperforming the MSCI emerging market index which is down 19 per cent in 2015.

Financial sector heavyweights Masraf Al Rayan and Qatar National Bank declined 4.8 per cent and 2.3 per cent, respectively.

Emirates NBD, Dubai's largest bank by market value, tumbled 4.1 per cent, reversing earlier session gains. Dubai Islamic Bank fell three per cent to Dh5.42, a 2015 low. Dubai Islamic is the second-biggest component of the emirate's gauge, accounting for about 15 per cent. The index is the most erratic in the GCC, according to its 30-day volatility measure. Drake and Scull slid 0.8 per cent to Dh0.38, hitting a new record low while Arabtec fell 2.6 per cent, falling to a four-year low.

Abu Dhabi's ADX General Index dropped 2.1 per cent as blue-chip etisalat, the largest stock by market value, slid 2.5 per cent

Saudi Arabia's benchmark index plunged 2.7 per cent to 6,764 points. It is down 32 per cent from a 2015 peak of 9,897 on April 30. Saudi Basic Industries Corp, one of the world's biggest producers of petrochemicals, retreated 2.7 per cent, the most since November 15.

Emerging markets posted their worst week since September as investors brace for the Federal Reserve's meeting and look for signs of an economic rebound in China. Markets across the GCC are being additionally roiled by a rout in crude prices that's stoking concern countries will pare back budgets.

Brent crude, a benchmark for half the world's oil, sank to $37.93 a barrel on Friday, the lowest level since December 2008. The S&P 500 Index fell the most last week since August. If the Fed raises interest rates December 16, it will be the first increase in almost a decade. Analysts said the persistent oil plunge coupled with global markets selloff and margin calls are starting to have a big impact now.

The Bloomberg GCC 200 Index, which tracks 200 of the biggest publicly-traded companies in the Gulf, slid to the lowest level since May 2013.

That cut its price to projected 12-month earnings ratio to 11 times compared with 10.8 times for the MSCI Emerging Markets Index.

MSCI's developing markets gauge fell 4.8 per cent last week, while a measure of nine Chinese raw-material producers traded in Hong Kong fell to the lowest since December 2008, as investors speculated that growth in domestic consumption and services will fail to offset a manufacturing slowdown in the world's second- largest economy.

Egypt's bourse fell 3.7 per cent to 6,395 points, within 93 points of November's 2015 low.

By Isaac Johan

 


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