Saudi plunges to 35-month low as oil drop fu­els rout



Saudi Ara­bia’s bench­mark in­dex tum­bled to a 35-month low yes­ter­day and Dubai and Egypt’s bench­marks hit their low­est closes of 2015 as a re­newed slump in oil prices spurred a re­gion-wide sell-off. Saudi’s bench­mark fell 2.9 per­cent to its low­est fin­ish since Jan. 1, 2013 to take its losses this year to 17.4 per­cent.

Oil made its big­gest weekly de­cline in eight months last week and US Light Crude fell 5.1 per­cent on Thurs­day and Fri­day alone, the lat­ter de­clines com­ing af­ter re­gional bourses last traded. The sus­tained slump in oil prices has hurt state fi­nances in the Gulf along with earn­ings in the im­por­tant petro­chem­i­cal sec­tor. “Gulf mar­kets have been in a bear­ish mode for quite a while now; to­day’s de­clines were trig­gered by the lat­est drop in oil prices,” said Sha­keel Sar­war, head of as­set man­age­ment at Se­cu­ri­ties & In­vest­ment Co (SICO) in Bahrain.

“Third quar­ter earn­ings have not been help­ful ei­ther,” he said, fore­cast­ing Gulf mar­kets’ earn­ings would fall 10-15 per­cent on av­er­age in 2015 based on re­sults for the first nine months of the year.

Saudi Ba­sic In­dus­tries Corp (SABIC) and fel­low petro­chem­i­cal pro­duc­ers Saudi Kayan each dropped 3 per­cent. Al­most all sec­tors de­clined in a broad sell-off. The bank­ing in­dex lost 2.7 per­cent. “In­vestors are now re­al­is­ing oil prices won’t re­cover any time soon,” Sar­war said.

Con­struc­tion stocks headed losers as Dubai’s in­dex fell 3.7 per­cent to its low­est close since mid-De­cem­ber 2014 Drake & Scull plunged the max­i­mum daily limit of 10 per­cent to an all-time low af­ter the con­trac­tor re­ported a third-quar­ter net loss of 985 mil­lion dirhams ($268.18 mil­lion).

Builder Arabtec dropped 9.3 per­cent to take its losses to 85 per­cent from a May 2014 high, since when sev­eral se­nior man­age­ment have left. It has re­ported widen­ing losses in the past four quar­ters in­clud­ing a thirdquar­ter loss of 944.8 mil­lion dirhams last week.

In Abu Dhabi, Eti­salat dropped 1.6 per­cent as traders booked prof­its af­ter MSCI said it would in­clude the tele­com op­er­a­tor in its emerg­ing mar­ket in­dex from Novem­ber-end.

Eti­salat’s shares had gained 29 per­cent since June when the for­mer monopoly said it would al­low for­eign­ers and in­sti­tu­tions to own its shares, a pre­req­ui­site to join the in­dex. In Egypt, the main in­dex fell 4.2 per­cent to a 23-month low as losers out­num­bered gain­ers 26 to one. — Reuters

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