Middle East markets: Gulf stocks fall on US rating cut, Saudi recovers

Most Gulf bourses slumped to lows of at least several months on Sunday, rattled by a US rating downgrade which sparked worries the global economy may retreat into recession. Concerns are high that the US economy may slide back into recession as it grapples with a climbing debt burden and a budget deficit.
The Standard & Poor's cut the US long-term credit rating by a notch to AA-plus and called the outlook "negative", signalling likelihood of a further downgrade.
Dubai's benchmark closed at a 20-week low, slumping 3.7 percent in its largest daily decline since Feb. 28 during widespread regional political unrest. Blue-chip Emaar Properties ended down 5.3 percent, and Dubai Financial Market closed off 5 percent. Contractor Arabtec sagged 6.3 percent after its second-quarter profit fell 74 percent.
"The global story is looking increasingly less optimistic, and at the same time you have equity markets here that have been relatively less volatile for a considerable stretch," said Akram Annous, Dubai-based regional strategist at Al Mal Capital.
"That's probably going to start to change now, and I think the majority of the risk is in Saudi Arabia and Qatar's markets because they are more leveraged to the (emerging market) growth story." In Qatar, the index fell to a six-week low, down 2.5 percent. Shares recovered some early session losses but still ended at their lowest level since June 27.
Abu Dhabi's measure dropped 2.5 percent to end at its lowest level since May 26. Heavyweights tumbled, with First Gulf Bank closing down 5.9 percent and Abu Dhabi Commercial Bank losing 4.5 percent.
The emirate's biggest developer, Aldar Properties, slumped 6.3 percent. Investors in the world's largest oil exporting region - where all but one Gulf Arab state is pegged to the US dollar - are worried about the fallout from a weaker greenback.
"Our currencies will ... depreciate, which could be inflationary for the region and impact negatively on sentiment," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.
Saudi Arabia's market was the only regional bourse to end higher, as bargain hunters stepped in to pick up battered stocks after the bourse plunged to a five-month low on Saturday. Heavyweight Saudi Basic Industries Corp (SABIC) dropped 0.3 percent but Al-Rajhi Bank climbed 1.1 percent.
Elsewhere, Egypt's main index fell 4.2 percent to its lowest level since April 2009. All but one of the 30 stocks on the index closed lower. Kuwait's index ended down 1.6 percent at a fresh seven-year ebb, its lowest close since Sept. 2004.
Oman's bourse ended at a new two-year low, with the benchmark down 1.9 percent. "In the immediate term, (I expect a) 5-8 percent drop in this week and then markets could move sideways. I don't see any catalyst in the medium term. It will also depend on how markets open internationally tomorrow," said Global's Hameed.