Gulf markets fall on regional economic fears

MARKETS FALL: Gulf markets traded lower on Sunday, tracking sharp declines on Saudi Arabia's bourse the previous day. (Getty Images)

Gulf markets fell on Sunday, tracking sharp declines on Saudi Arabia's bourse the previous day as investors took oil's fall below $50 as a sign regional economic growth would slow.

Saudi Arabia's main index closed lower for a fourth trading day as a third interest rate cut in less than two months by the Saudi central bank did little to turn the negative tide.

The benchmark, down more than 60 percent this year, lost 3.77 percent to 4,264.52 points. Saudi Basic Industries Corp. (SABIC) retreated 3.59 percent and Samba Financial Group 6.99 percent.

Investors expect earnings of companies like SABIC will be hindered by slower demand during a possible global recession, said Haissam Arabi, chief executive and fund manager for Gulfmena Alternative Investments, a regional specialist hedge fund company under formation.

"The governments' ability to continue its expansionary policy is going to be hindered by lower oil revenues," he said.

Emaar Properties fell almost eight percent to its lowest close in more than four years as UAE markets led a retail investor selloff across the region.

The Dubai index dropped 4.73 percent to 1,917 points, its lowest close since Nov. 18, 2004. Emaar dropped 7.77 percent to 2.73 dirhams, the property developer's lowest close since Aug. 1, 2004.

In Abu Dhabi, First Gulf Bank fell 5.46 percent, pulling the index down 1.26 percent to 2,797.76 points.

"The trend is down, down, down," said Amr Diab, head of sales at EFG-Hermes.

"The markets in the region are dominated by retail investors and retail investors are not long-term investors - they trade the market and cut losses quickly."

Oman's main index closed lower for the first time in five trading days, steered by Oman Telecommunications Co. (Omantel) and banking stocks.

Omantel shed 3.56 percent, Bank Muscat 2.31 percent and Oman International Bank 9.65 percent. The index slid 2.59 percent to 6,060 points.

Markets in Qatar, Bahrain and Kuwait also ended lower.

Qatar's benchmark fell 4.02 percent to 5,575 points, Kuwait's measure shed 0.75 percent to 8,809 points and Bahrain's dipped 0.85 percent to 2,037 points.

Bank of Bahrain and Kuwait plunged 10 percent, Mobile Telecommunications Co. (Zain) lost 3.57 percent and Industries Qatar fell 6.25 percent.

"Investors are right on the edge. When they see something negative anywhere, they start selling," said Amro Motasim, chief trader at Qatar's Ahli Bank.

"There are big rumours oil is going to reach $30. The main driver of the economy here is the government and most government revenues come from oil. The fear is future expansion plans will be shelved or put on hold."

Oil prices fell below $50 a barrel last week - around the level that Gulf oil producers base their budgets.

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