Dubai, Saudi, Qatar bourses plunge amid oil price decline
Markets across the Middle East tumbled on Thursday as global equities and oil prices continued to decline, while Saudi Arabia’s drop was magnified by investors selling to prepare for a $6 billion initial public offer of shares.
Brent crude oil, which has slid more than 28 percent since June because of slow demand growth and signs that producers are not cutting output, hovered around $83 per barrel, near a four-year low.
Economists and fund managers continue to believe the oil price decline will not be disastrous for Gulf economies and markets. “Lower oil prices shouldn’t cause too many problems for the Gulf economies thanks in large part to their relative prudence over the past decade,” Jason Tuvey, Middle East economist at London’s Capital Economics, said in a report.
The main Saudi index closed 3.6 percent down after tumbling as much as 5.7 percent earlier in the session. The benchmark has now erased all of the 14 percent gains which it posted after authorities announced in late July that they would open the market to direct foreign investment early next year.
Saudi Arabia’s largest lender, National Commercial Bank, will open subscriptions for its IPO – the largest-ever in the Arab world – next week, and investors were cashing out to prepare for that.
Based on monthly changes in the last 10 years, SABIC’s share price has only a moderate correlation with Brent crude, according to Reuters data, with an index of 0.5 out of a maximum of 1.0.
The Saudi petrochemical index, tracked since 2007, has a stronger correlation of 0.65. But the overall Saudi stock market index has a weak correlation of 0.36.
Dubai’s bourse tumbled 5.0 percent, extending its decline late in the session in reaction to Saudi Arabia’s drop.
Abu Dhabi’s index fell 2.3 percent in a broad sell-off. Abu Dhabi Commercial Bank was the main drag, down 3.6 percent. Qatar’s benchmark dropped 2.9 percent as almost all shares fell.
Oman’s market tumbled 3.3 percent, its biggest one-day decline since February 2011, as all liquid stocks fell.
Egypt’s bourse, which edged up in the previous session, turned around on Thursday and dropped 3.4 percent.
Source: arabianbusiness- Dubai, Saudi, Qatar bourses plunge amid oil price decline
