Stock News: Dubai Tumbles To One-Year Low On Weak Oil

Gulf stock markets plunged in early trade on Tuesday after oil resumed its slide on bearish comments about OPEC and weak Chinese manufacturing data.

Brent crude prices fell below $60 a barrel for the first time since July 2009 as Chinese factory activity slowed and stumbling emerging market currencies dented demand expectations. United Arab Emirates Oil Minister Suhail Bin Mohammed al-Mazroui said late on Monday that there was no need for an emergency OPEC meeting to try to support oil prices.

The Dubai equities benchmark tumbled 7.7 per cent to 3,068 points, a one-year low. Abu Dhabi’s index dropped 4.9 percent to 3,975 points, also hitting its lowest level since last December.

Qatar’s bourse fell 3.6 per cent, Kuwait lost 2.4 per cent and Oman was down two per cent.

Saudi Arabia’s index dropped 3.9 per cent to 7,597 points, its lowest level since September 2013.

Although Dubai exports only a small amount of oil, investors fear reduced export revenues in the Gulf could prompt governments to slash spending and slow the regional economy, for which Dubai serves as a financial and commercial centre.

Speaking at a conference in Dubai on Tuesday, an International Monetary Fund official said that although the oil price plunge would cut revenues of Gulf Arab governments, they had big reserves so in general they would not need to cut state spending significantly.

A senior Dubai official said the emirate’s economy was coping well with a difficult global environment and was expected to grow about 4.5 per cent this year. An Abu Dhabi official said oil’s slide would not affect economic development projects.

The retail investors who dominate equity trading in the Gulf are ignoring such statements, however, and instead scrambling to sell to avoid further losses. Some have leveraged positions which they are being forced to exit.

Egypt’s stock market dropped 3.3 per cent on concern that flows of aid and investment from the Gulf could shrink.