Gulf markets end lower amid global gloom

STOCKS SLIDE: Dubai and Abu Dhabi markets fell on Thursday. (Getty Images)

Gulf Arab markets slumped on Thursday, felled by a combination of worries about corporate earnings and global economic prospects amid a waning oil price.

Bank stocks were particularly hard-hit as a slew of bad news this week weighed on the sector, ranging from a surprise decline in Qatar National Bank's quarterly profit, an earnings warning from Bank Muscat and Moody's negative outlook on UAE banks. Adding to the gloomy sentiment, banks in Europe and the United States faced fresh doubts about their ability to ride out the global financial crisis, provoking another crisis of confidence.

"All that is bringing back the fear factor," said Mohammed Yasin, managing director of Shuaa Securities. "In the GCC market, the UAE in particular, we started the year with optimism that maybe things will be much better in terms of liquidity. But in past days, statements coming out have been trying to lower expectations of people and (they) bring back fears about the economy, outlook."

Qatar's index QSI shed 7.01 percent, as Qatar National Bank extended its decline, falling 9.29 percent as the market continued to react to its results which missed forecasts.

"The (Q4 results) indicated the bank sector could witness a drop of profits in Q1 and Q2 in 2009," said Mohamed Abu Ghoush, head of equities brokerage at Ahli Bank in Doha. "QNB is a leader of sector ... and considered as an indicator for the whole market profit".

In Oman, the benchmark index MSI ended at its lowest level since Dec. 25, hampered by Bank Muscat which issued a profit warning.

Shares in the bank fell nearly 6 percent after it said on Thursday that it may book about 26.9 million rials in writedowns in its 2008 results, due at the end of January.

Adding to negative sentiment on Thursday, oil prices remained soft, despite a small uptick from earlier lows. At 15.53 UAE time, US light crude stood at $37.80.

"Sentiment is still negative because of the decline in oil prices, this causes our markets to be destabilised for the current time," says Adel Nasr, local brokerage manager at United Securities in Muscat. "Until oil prices stabilise, we will continue to see more of this."

The Saudi market was closed on Thursday. (Reuters)

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