Middle East Stocks Sink as Dubai Weekly Drop Worst in Six Years

Dubai shares tumbled, leading a slump in stocks throughout the Middle East as oil extended its retreat and on concern global growth may slow.

The Dubai Financial Market General Index fell 5 percent to close at 4,270.43. The measure has slid 14 percent this week, the most since December 2008, leaving its 14-day relative strength index at 23.4, the lowest since May 2012. A level below 30 indicates to some investors the measure was oversold. Saudi Arabia’s Tadawul All Share Index retreated 3.6 percent to 9,547.54. Abu Dhabi’s ADX General Index lost 2.3 percent and Qatar’s QE Index slipped 2.9 percent.

Global stocks are dropping as economies worldwide show signs of slowing. The MSCI Emerging Markets Index fell to the lowest since March as of 5:22 p.m. in Dubai, and the Stoxx Europe 600 Index posted the longest slump in 11 years. The epicenter of the economic worries is the euro area, where European Central Bank President Mario Draghi is trying to tackle the weakest inflation in almost five years as investors bet it will deteriorate further amid signs powerhouse Germany is now faltering.

“It’s a reaction to weak global economic data, which was expected,” Nayal Khan, head of institutional sales and trading at Naeem Holding brokerage in Dubai, said by e-mail. “Naturally with oil prices being where they are, it doesn’t help the situation much.”

Declining oil prices are exacerbating the slump after the International Energy Agency predicted the lowest demand growth since 2009. Brent crude, a benchmark for more than half of the world’s oil, lost 0.8 percent to $83.07, the lowest on a closing basis since 2010.

The average break-even oil price for governments in the six-nation Gulf Cooperation Council, home to almost a third of the world’s proven oil reserves, is about $84, according to International Monetary Fund data.

Growth Slows

Having pulled the euro-area economy out of its debt panic in 2012, Draghi has sought to boost prices by cutting interest rates to record lows, issuing cheap loans to banks and laying the groundwork to begin buying private-sector assets this month. That leaves purchases of government debt as the last option. Sentiment began souring on Oct. 2, when Draghi stopped short of spelling out for how much the ECB might buy assets to head off deflation.

In the U.S., retail sales dropped more than forecast in September, decreasing 0.3 percent after a 0.6 percent gain in August that was the biggest in four months, Commerce Department figures showed. The median forecast of economists surveyed by Bloomberg called for a 0.1 percent decline.

Earlier this month, the International Monetary Fund reduced its forecast for global growth next year to 3.8 percent, from a July prediction of 4 percent, and minutes of the Federal Reserve’s September policy meeting showed officials are concerned the U.S. economy may be at risk in a global slowdown.

Al Rajhi Drops

Dubai’s gauge was the worst performer among more than 90 indexes tracked globally by Bloomberg. Dubai Islamic Bank PJSC, the largest Sharia-compliant lender in the United Arab Emirates, led the losses, slipping 7.1 percent to 6.80 dirhams. Arabtec Holding Co. slid 8.7 percent to 3.58 dirhams.

Shares in Saudi Arabia, the world’s second-worst performers today, have declined 12 percent this week. The kingdom is the biggest producer in the Organization of Petroleum Exporting Countries. Saudi Basic Industries Corp., the world’s largest petrochemical producer, lost 5.9 percent to 108.03 riyals.

Al Rajhi Bank, the world’s biggest publicly-traded Islamic bank, tumbled 4.5 percent today to 63.13 riyals after its third-quarter profit dropped about 3 percent to 1.66 billion riyals ($443 million), the bank’s fifth consecutive quarterly decline. The mean estimate of eight analysts was for profit of 1.94 billion riyals, according to data compiled by Bloomberg.

“The selloff is driven by the fall in oil prices and consequent expectations of a potential slowdown in the kingdom given their significant impact on the its revenues,” Amer Khan, senior executive at Shuaa Asset Management in Dubai, which oversees more than $300 million in assets, said by e-mail.

Egypt’s EGX 30 Index lost 3.4 percent, Oman’s MSM 30 Index slipped 3.3 percent, Kuwait’s SE Price Index retreated 1.7 percent and shares in Bahrain fell 1 percent.

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