Stock News: Gulf Markets Drop As Oil Hits Fresh Lows

Gulf stock markets fell in early trade on Tuesday as Brent crude oil slumped to a fresh 5-1/2-year low and political uncertainty in Greece put pressure on global equities.

Brent approached $57.0 per barrel as persistent worries about a global supply glut offset concerns about output disruptions in Libya.

Saudi Arabia’s main stock index dropped 2.9 percent with most stocks in the red. Petrochemicals giant Saudi Basic Industries, down 3.2 per cent, was the main drag.

Saudi Ceramic Company was among a handful of gainers, adding 2.2 per cent after it announced a bonus share issue, a dividend payout, and plans to increase its stake in unlisted Ceramics Pipe Co.

Dubai’s index tumbled 5.0 per cent as most stocks declined. Builder Arabtec Holding and developer Emaar Properties, the most heavily traded stocks, lost 7.2 and 6.0 per cent respectively.

Although Dubai is much less dependent on oil revenues than other Gulf states, its stock market has been hit hardest in the region in recent months because of its higher liquidity, exposure to foreign investors and the unwinding of leveraged positions.

Elsewhere in the Gulf, Abu Dhabi’s index fell 1.3 per cent, Kuwait lost 1.6 per cent, Oman dropped 2.1 per cent each and Qatar’s bourse was down 2.0 per cent.

The Saudi government announced last week that it would continue spending heavily in its 2015 budget plan, easing investors’ fears that cheap oil would lead to major state spending cuts in the Gulf. As long as state spending continues, economies and corporate profits in the big Gulf economies are expected to keep growing healthily.

However, Gulf bourses’ pull-back on Tuesday showed weak oil prices can still hurt sentiment among the local retail investors who dominate trading volumes.

Outside the Gulf, Egypt’s bourse edged up 0.3 percent in early trade on the back of developer Talat Moustafa Group and Commercial International Bank, up 1.9 and 0.5 per cent respectively.

Global equity markets were soft on Tuesday as investors avoided risk after a sharp sell-off in commodities, and also because of political uncertainty in Greece where Prime Minister Antonis Samaras failed to get enough support for his presidential nominee on Monday, and will call a national election for Jan. 25.