Global fears keep Gulf stocks in red

DUBAI: Gulf stock markets dropped on Tuesday as world markets deteriorated over fears of a global economic recession because of European and US economic woes.

The Dubai Financial Market index closed trading 1.95 percent down at 1,444.29 points with leading Emaar Properties falling 2.83 percent and Arabtec construction group dropping 2.99 percent.

In Abu Dhabi, the capital's stock market slipped 1.34 percent to 2,577.76 points at the close. All sectors were down, with energy leading the losses by a drop of 3.93 percent.

The Saudi market, which closes at 03:30 pm (1230 GMT), reduced its losses during the day to 2.54 percent at 5,903.73 points, after it plummeted 4.27 percent at opening.

The leading petrochemical sector, which shed 5.49 percent of its value at opening, narrowed its losses to 3.26 percent.

The largest Arab bourse shed 5.46 percent of its value on Saturday after being the first market to feel the impact of the historic downgrading of the US credit rating late on Friday by Standard and Poor's.

Other Gulf markets closed in the red on Tuesday.

Qatar Exchange, the second largest Arab stock market, was 1.76 percent down at 8,070.69 points.

Kuwait Stock Exchange also widened its losses to 1.25 percent, closing at 5,882.2 points.

Muscat Securities Market in Oman also closed 2.42 percent down at 5,894.02 points, and Bahrain Bourse dropped 0.73 percent to 1,265.38 points.

"There is a complete surrender to the developments in global markets... Local markets are ignoring the economic fundamentals of the region," said financial analyst Wadah Taha.

"There is total panic and an inability to diagnose the developments in Europe and the United States and understand their potential impact on regional markets," he said.

Although oil prices continued to fall, Taha said that the impact on the economies of the oil-rich region should be limited as current prices remain over the prices projected in governments' budgets.

The price of New York crude sank below $80 in Asian trade and its Brent counterpart briefly dropped under $100.

"It is understandable if companies linked to energy and petrochemicals were affected, but many listed companies are local in their activities and their drop is not justified," said Taha.

He said that confidence was unlikely to return to Gulf markets before strong signals for drastic action in Europe and the United States to calm global markets.

"Markets will remain in fear, watching what happens abroad and ignoring local fundamentals," he said.

Global markets are reeling under the impact of fears over global economic growth and sovereign debt after the downgrading of US credit rating and debt problems in the eurozone.

Copyright AFP (Agence France-Presse), 2011