Arabian Gulf stock markets slid on Sunday amid fears about the economic effect of the falling price of oil, which closed on Friday at a seven-year low.
The global crude benchmark Brent ended Friday down 0.5 per cent to US$36.88 a barrel, and West Texas Intermediate finished 0.6 per cent lower at $34.73 a barrel. Oil declined after a report from the oil services firm Baker Hughes showed an increase in rig counts in the United States, a factor that would exacerbate the current oil glut.
The oil price decline contributed to the slide in US equities on Friday, with the S&P 500 and Dow Jones Industrial Average indexes ending the session lower.
Oil, which has shed more than half its value since last year’s prices of more than $100 a barrel, took a beating this month when Opec, the organisation pumping 40 per cent of the world’s oil, could not reach a decision on its output ceiling, leaving members to produce at will.
The decline in oil prices is slowing down the economies of the energy-exporting Arabian Gulf region, where governments are slashing spending, tapping their reserves and borrowing more to cover fiscal deficits.
“So far there are no catalysts for a move upwards so prices will remain under pressure or volatile,” said Muhammad Shabbir, the Dubai-based head of equities at Rasmala Investment Bank.
Saudi Arabia, the world’s biggest oil exporter and the largest Arab economy, led the regional stock market rout yesterday, with a 1.6 per cent drop to 6,931.08. Bank stocks fell the most, with Al Rajhi Bank losing 3.9 per cent to 51.5 Saudi riyals and Alinma Bank dropping 2.8 per cent to 14.75 riyals.
Kuwait declined 0.9 per cent, Bahrain 0.2 per cent and Oman 0.08 per cent. Qatar’s stock market is closed for holidays.
Dubai lost 1.5 per cent to 3,026.05, led by property and construction stocks.
The mortgage lender Amlak shed 5.3 per cent to Dh1.25, Union Properties dropped 3.7 per cent to 70 fils and Arabtec fell 3.6 per cent to Dh1.05.
“It is mainly the concern regarding the slowdown in real estate and the emerging liquidity problems with the banks,” said Mr Shabbir. “I think the general sense is that the construction business will suffer.”
Abu Dhabi was the only market that rose, adding 0.1 per cent to 4,155.71, led by energy stocks.
dalsaadi@thenational.ae
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