Stock News: Qatar Enters Bear Market As Dubai Erases 2014 Gains

Shares in Qatar plunged, becoming the fifth gauge in the oil-rich Gulf Cooperation Council to enter a bear market, as crude prices dropped to the lowest level since July 2009. Dubai’s gauge wiped out this year’s advances.

Qatar’s QE Index lost 5.9 per cent to 11,114.43 at the close in Doha, bringing its decline since September’s record high to 23 per cent. Dubai’s DFM General Index lost 7.6 per cent, the most since October 2008. The shares have retreated 34 per cent this quarter, turning one of the world’s best gains in 2014 into a 1.4 per cent loss. The measure, along with indexes in Saudi Arabia, Kuwait and Oman fell into a bear market in the past three weeks.

Brent crude slumped to $61.85 a barrel last week after the Organization of Petroleum Exporting Countries cut its forecast for demand in 2015 to the weakest level in 12 years. The Dow Jones Industrial Average had its worst week since 2011 and European shares fell the most in more than three years. The United Arab Emirates’ Energy Minister Suhail Al-Mazrouei said today OPEC won’t cut production even if prices fall to $40 a barrel. The GCC is home to about a third of the world’s proven oil reserves.

“This is an overreaction to further falls in oil prices and global markets,” Saleem Khokhar, who helps oversee about $3 billion at NBAD Asset Management Group, said by telephone from Abu Dhabi. “Valuations have become quite attractive and I expect the markets to stabilize soon.”

Dubai stocks now trade at 10.4 times estimated 2015 earnings, compared with 10.7 for MSCI Inc.’s emerging markets index. The DFM gauge traded as high as 21 times trailing earnings at the end of August, according to data compiled by Bloomberg. The ratio for Qatari and Saudi shares fell to 11.5 times and 11 times projected profits next year, respectively.

Oil Revenue

Saudi Arabia’s Tadawul All Share Index fell 3.3 per cent to 8,119.08, the lowest close in 13 months. Abu Dhabi’s ADX General Index slipped 3.6 per cent, taking its retreat from a May peak to almost 20 percent. The measure has erased gains this year to slide 1.9 per cent. The exchange today announced a five-minute trading halt if a stock moves by five per cent to “prevent rash decisions,” according to an e-mailed statement.

Kuwait’s SE Price Index lost 2.9 per cent, Oman’s benchmark declined 3.2 per cent and Bahrain’s measure fell 0.6 per cent.

“Oil is a major source of revenue for government budgets in the region,” Tariq Qaqish, fund manager at Al Mal Capital PSC, said by telephone from Dubai. “Lower oil prices mean lower spending. Lower spending means less economic growth.”

Governments in the region need a break-even oil price of about $80 a barrel for this year, according to International Monetary Fund estimates.

Oil and natural gas production contributes to more than half of Qatar’s gross domestic product, according to the U.S. Energy Information Administration. All 20 of the stocks on the nation’s index declined.

The host of the 2022 World Cup and holder of the world’s third-largest natural gas reserves plans to spend $210 billion over seven years on roads, stadiums, a rail network and a new city before the soccer tournament.