Most stock markets in the Middle East continued to decline on Wednesday as global equities remained under pressure and disappointing quarterly earnings and forecasts weighed on bourses in Oman and Kuwait. While selling of Gulf stocks in previous days was fairly indiscriminate, many oil-related shares suffered most on Wednesday as the price of Brent crude slipped to a fresh 47-month low, before recovering slightly to around $84 a barrel.
Lower oil prices are not a disaster for Gulf economies, which have little debt and large fiscal reserves that they can use to maintain government spending. But the prospect of smaller state oil revenues is having some impact on investor sentiment in the region, and pulling down stocks such as petrochemical producers - which benefit from a cost advantage over foreign rivals when global oil prices are high - and companies serving the drilling industry.
-- Qatar joins regional sell-off
Dubai's index edged up in early trade after US and Asian stocks appeared to be stabilising, but changed direction when European markets opened in the red; Dubai closed 1.7 percent down as most stocks fell. Dubai Islamic Bank was the main drag, dropping 3.6 percent. At 4,493 points, the Dubai index closed below its 200-day average, now at 4,557 points, for the first time since the market's bull run was beginning in December 2012 - a negative longer-term technical signal.
Abu Dhabi's benchmark edged down 0.2 percent, following European stocks and giving up early-session gains. Qatar's bourse fell 1.4 percent, even though it is seen by many as the Gulf market least vulnerable to a global downturn since the Qatari government has shown a willingness to support listed companies when they run into trouble. Drilling rig provider Gulf International Services, down 3.1 percent, and petrochemicals-to-metals conglomerate Industries Qatar, off 1.4 percent, were among the main drags.
The profitability of petrochemicals could also come under pressure from potentially lower demand in China, where data this week showed consumer inflation has slowed to a level not seen since 2010. Petrochemicals giant Saudi Basic Industries (SABIC) dropped 3.6 percent and was the main drag on Saudi Arabia's index, which fell 2.7 percent. The benchmark has now lost almost all of the gains it had made since July 22, when the kingdom's regulator said it would allow direct foreign investment into local stocks in early 2015.
Egypt's bourse was on outlier, edging up 0.2 percent. Ezz Steel was one of the main supports, adding 2.0 percent after the Cairo government imposed temporary tariffs to protect domestic steel rebar manufacturers from cheap foreign imports. Kuwait's main index fell 0.5 percent. Gulf Finance House dominated trading volume, tumbling 6.4 percent after Fitch Ratings said on Tuesday that its "profitability remains weak and volatile and is unlikely to improve materially and sustainably until significant balance sheet and business model reshaping has taken place".
Oman's index fell 0.9 percent, dragged down by poor third-quarter results. Shares in Raysut Cement fell 1.6 percent after the company missed analysts' expectations despite reporting a 17.8 percent increase in quarterly net profit after tax on Tuesday. Oman Cables Industry dropped 4.2 percent after its net profit shrank 14 percent. Bank Dhofar fell 1.6 percent after reporting an 18 percent increase in third-quarter net profit on Wednesday that missed two analysts' forecasts.
Comments
Comments are closed.