Qatar Stocks Drop to 2-Year Low as Oil Rout Batters Gulf Markets

  • Bloomberg GCC Index falls to lowest level since December 2012
  • Abu Dhabi banking index slides to lowest in two years

Qatar’s stocks declined to the lowest level in more than two years, leading a retreat across the six-nation Gulf Cooperation Council, after oil extended losses from the lowest close since 2004.

The QE Index dropped a fourth day, slipping 2 percent to its weakest close since September 2013. Saudi Arabia’s Tadawul All Share Index fell 1.8 percent to the lowest level since November 2011. The Bloomberg GCC 200 Index, which tracks 200 of the region’s top companies, fell 1.6 percent to a three-year low.

The slide in oil prices has raised concern that economic growth in the GCC, home to about 30 percent of the world’s proven crude reserves, may stall, curbing company profits as income from energy falls. Brent crude dropped as investors awaited U.S. government data forecast to show oil supplies expanded and Iran announced plans to sell a new grade of crude as soon as March, exacerbating a global glut.

“We are not at a stage where investors are looking for value, they are concerned what happens to earnings if oil remains at about $20 for a few years,” said Tariq Qaqish, the head of asset management at Dubai-based Al Mal Capital PSC. “The recent drop is significant. It’s impacting investor confidence and growth potential for the region.”

Brent, a pricing benchmark for about half the world’s oil, fell for the seventh trading day, slipping 0.1 percent to $31.51 a barrel as of 12:48 p.m. in London, the lowest level since April 2004 on a closing basis.

Qatar National Bank SAQ, which accounts for about 15 percent of Doha’s stock index, retreated 3.1 percent to the lowest level since June 2013. Saudi Basic Industries Corp., one of the world’s biggest chemicals manufacturers, led declines in Saudi Arabia with a 4.1 percent loss.

Sabic’s $1 billion bonds due October 2018 fell, with the yield jumping 22 basis points to 3.19 percent, the highest on record.

Banks Retreat

Oman’s MSM 30 Index lost 0.9 percent and Kuwaiti stocks slid 0.6 percent, falling a seventh day. Dubai’s DFM General Index declined 0.7 percent in the longest losing streak in more than a year.

Abu Dhabi’s ADX General Index slid 1.5 percent. First Gulf Bank PJSC, United Arab Bank PJSC and Abu Dhabi Commercial Bank PJSC led the drop in Abu Dhabi. The Abu Dhabi Securities Market Banks Index slid 2.9 percent to the lowest level since September 2013. Gulf banks have seen deposit growth slow because of the slump in crude.

“Lower liquidity will hamper the banking sector’s ability to finance the private sector, which in turn is likely to negatively impact non-oil growth in the GCC,” Sachin Mohindra, an Abu Dhabi-based portfolio manager, said in a note to clients. “This will make it difficult for banks to implement rate hikes across their loan portfolios, and will keep their fee income low throughout 2016.”

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