Dubai Shares Slump as Oil Rout Triggers Gulf Arab Stock Retreat

Every major stock market in the Gulf region fell, led by shares in Dubai, after Brent oil dipped below $55 a barrel for the first time since May 2009.

The DFM General Index slipped 3.2 percent to 3,450 at the close, the lowest since Dec. 18. The Tadawul All Share Index in Saudi Arabia, where income from hydrocarbon sales accounted for almost 90 percent of the government’s estimated revenue last year, decreased 0.6 percent. The ADX General Index in Abu Dhabi, whose oil-based economy accounts for about half of its gross domestic product, lost 2.7 percent.

“With crude continuing its downward trend, regional markets are selling off once again with vigor,” Ramez Merhi, a Dubai-based director for asset management at Al Masah Capital Ltd., which manages $500 million, said by e-mail. “Oil looked as though it would consolidate at the $60 level just before the end of the year. But it couldn’t, hence, there’s been an aggressive selling reaction from equity investors this year.”

With crude losing more than $50 a barrel in 12 months, investors are wary of putting their money in a region where governments rely on oil revenue to fund their budgets. Brent crude decreased 5.9 percent yesterday, sparking a global equities rout that saw the S&P 500 drop for a fourth day, its longest losing streak since December 2013. The Stoxx Europe 600 Index slid 2.2 percent yesterday. The MSCI Emerging Market Index fell 1 percent today at 1 p.m. in London, while crude decreased 1.7 percent.

At least six stock indexes in the Gulf Cooperation Council, home to about a third of the world’s proven oil reserves, fell into bear markets since November after Brent plunged.

Sabic Drop

In Dubai, Dubai Islamic Bank PJSC, the biggest Shariah-compliant lender in the United Arab Emirates, slid 3.6 percent to the lowest since Dec. 18. The lender hired banks for a potential perpetual bond sale as it seeks to boost Tier-1 capital.

Saudi Basic Industries Corp., one of the world’s biggest petrochemicals makers, led declines in Saudi Arabia, the world’s biggest oil exporter. The stock slumped 3.2 percent to 77 riyals, the lowest since Dec. 17.

The benchmark index, which fell as much as 4.2 percent earlier, pared losses after the kingdom said it will maintain its stability even with falling crude prices, according to a speech from King Abdullah read by his crown prince.

Elsewhere in the region, Qatar’s QE Index and Kuwait’s SE Price Index each slipped 1.5 percent. Oman’s MSM 30 Index lost 1.3 percent. Shares in Bahrain added 0.3 percent.

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