Stock News: Dubai Tumbles After Oil Hits Fresh Low

Stock markets across the Middle East fell sharply on Sunday after the price of oil hit a new low on Friday, triggering a fresh wave of panic selling of equities in the Gulf oil producers.

The Dubai benchmark tumbled 6.1 per cent to 3,374 points, erasing most of its remaining year-to-date gains. Developer Emaar Properties was down 7.2 per cent and builder Arabtec Holding lost 6.6 per cent.

The main index in Abu Dhabi dropped 3.5 per cent, destroying all gains made earlier this year. Qatar’s bourse tumbled 6.6 per cent to 11,031 points, an 11-month low.

“It’s sentiment over fundamentals,” said Sanyalak Manibhandu, manager of research at NBAD Securities in Abu Dhabi. “People are just doing more of what they have been doing for the last few weeks.”

Saudi Arabia’s index dropped 3.5 per cent shortly after opening. Shares in petrochemicals giant Saudi Basic Industries were the main drag and tumbled 4.7 per cent after its chief financial officer said he had left the company to become chief executive of National Industrialisation Co (Tasnee), whose shares were down 2.8 per cent.

Saudi Arabian Mining Co (Ma’aden) fell 9.1 per cent after the bourse said it had deposited shares from its SAR5.6 billion ($1.5 billion) rights issue into investors’ accounts. In the current climate, investors may be tempted to sell some of them.

Kuwait dropped 3.2 per cent and Oman fell 2.6 per cent. Shares in telecommunications firm Viva Kuwait, which listed on Sunday, more than six years after its initial public offer, tumbled 7.1 per cent from their opening price.

Brent crude dropped nearly three per cent and settled at below $62 a barrel on Friday after the International Energy Agency cut its outlook for demand growth in 2015.

A plunge in the Gulf equity markets triggered by oil’s decline has wiped out roughly $150 billion of value since the end of October and selling may continue as few people are willing to call a bottom for the markets just yet.

Investors’ main concern is that governments in the region may start to cut spending in line with falling oil export revenues. Many analysts believe that most governments will comfortably be able to maintain spending, but Oman and Bahrain will be under pressure because of their lower fiscal reserves and higher fiscal break-even prices.

Oil importer Egypt also appeared to be hit by the gloomy sentiment and its index dropped 3.8 percent in a broad sell-off. Egypt’s economy could benefit greatly from cheaper oil but some investors also fear that aid and investment from the Gulf may diminish as energy prices slide.