Gulf bourses drop on weak oil prices

Most stock markets in the Gulf fell in early trade on Wednesday after Saudi Arabia and Iran dashed market hopes that the two major Opec producers would find a compromise at a meeting in Algiers to help ease a global glut of oil.

Brent oil futures sank about 3 per cent to around US$46 a barrel on Tuesday after Iran rejected an offer from Saudi Arabia to limit its oil output in exchange for Riyadh cutting supply.

Saudi Arabia’s index, which retreated 3.8 per cent on Tuesday after the government said it would scale back financial bonuses for public sector workers in an austerity drive, fell a further 0.5 per cent in the first half-hour on Wednesday to 5,703 points, approaching technical support on its February low of 5,551 points.

Petrochemical blue chip Saudi Basic Industries sank 1.2 per cent although one stock in the sector, PetroRabigh, rose 2.1 per cent after saying it would proceed eventually with a rights issue that has been delayed since 2015.

Saudi insurance stocks, which are favourites of local retail investors who now face cuts to their disposable income, were again hit hard; SAGR Insurance dropped 2.9 per cent. Travel agency Al Tayyar, also exposed to weak consumer spending, tumbled 4.9 per cent.

Dubai’s index edged down 0.3 per cent and Abu Dhabi slipped 0.2 per cent while the Qatari index was flat. In all three markets, most of the heavily traded stocks barely moved.

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