Gulf stocks at mercy of fall­ing oil price in Qatar-led re­treat


Qatari stocks led losses in most eq­uity mar­kets across the six-na­tion Gulf Co­op­er­a­tion Coun­cil af­ter Brent crude slumped to the low­est level since Jan­uary. The QE In­dex, the bench­mark share gauge for the world's big­gest ex­porter of liq­ue­fied nat­u­ral gas, re­treated 1.4 per­cent to 11,610.22, its weak­est close since April 1. Dubai's DFM Gen­eral In­dex's slipped 0.6 per­cent, while Saudi Ara­bia's Tadawul All Share In­dex gained 0.2 per­cent at 1:40 p.m. in Riyadh af­ter slid­ing as much as 1.1 per­cent.

Plung­ing oil prices are putting pres­sure on economies in the GCC, which rely on in­come from energy rev­enue to fund their state bud­gets. Brent capped a sixth weekly loss on Fri­day amid spec­u­la­tion that the re­turn of drilling rigs in the U.S. and Ira­nian ship­ments will pro­long a global glut. The GCC is home to al­most a third of the world's proven crude re­serves.

"The fall in oil is drain­ing con­fi­dence out of the mar­kets," said Wadah Al Taha, the Dubai-based chief in­vest­ment of­fi­cer of Al Za­rooni Group, who fa­vors bank­ing stocks in the re­gion over energy com­pa­nies un­til oil prices find a bot­tom. "With oil stay­ing be­low the $50 bar­rel level all of last week, there are doubts about a re­cov­ery in de­mand soon," he said.

Brent, the bench­mark grade for more than half of the world's oil, dropped 1.8 per­cent on Fri­day to $48.61 a bar­rel, the low­est since Jan. 28. Prices have fallen more than 50 per­cent in the past 12 months. Nat­u­ral gas for Septem­ber de­liv­ery de­clined 0.5 per­cent to set­tle at $2.798 per mil­lion Bri­tish ther­mal units on the New York Mer­can­tile Ex­change.

Iran is seek­ing to re­gain oil-mar­ket share by boost­ing sup­ply af­ter last month's nu­clear agree­ment with world pow­ers. Pro­duc­tion can in­crease by 500,000 bar­rels a day within a week af­ter sanc­tions end, and by 1 mil­lion bar­rels a day within a month, the state-run Is­lamic Re­pub­lic News Agency cited Oil Min­is­ter Bi­jan Nam­dar Zan­ganeh as say­ing in an in­ter­view last week with state TV.

Emaar Prop­er­ties PJSC, Dubai's big­gest devel­oper, was the top con­trib­u­tor to losses in the emi­rate's stock in­dex. Abu Dhabi's ADX Gen­eral In­dex fell 0.6 per­cent even as Dana Gas PJSC, the Shar­jah­based energy ex­plorer, rose 7 per­cent in more than four times the three-month av­er­age daily vol­ume.

Saudi Ara­bia's Al Ra­jhi Bank, the len­der with the big­gest weight­ing on the Tadawul, led the re­cov­ery with a 0.5 per­cent in­crease. The 14-day rel­a­tive strength in­dex of the Saudi gauge was at 24 at the end of last week, the low­est level since De­cem­ber. A level be­low 30 in­di­cate to some an­a­lysts the eq­ui­ties have dropped too fast and are poised to re­cover.

"The Saudi mar­ket has been very weak for the past few ses­sions due to oil's slump and some in­vestors are try­ing to build po­si­tions in an­tic­i­pa­tion of a short­term bounce back," Se­bastien Henin, the head of as­set man­age­ment at The Na­tional In­vestor in Abu Dhabi, said by phone. Henin, who over­sees $90 mil­lion in as­sets, is un­der­weight on Saudi eq­ui­ties un­til there are signs of oil-price re­cov­ery and the re­gional con­flicts in which Saudi Ara­bia is in­volved are re­solved.

Kuwait's gauge also erased losses to close 0.4 per­cent higher. Bahrain's mea­sure was lit­tle changed, while Oman's MSM30 In­dex de­creased 0.4 per­cent.

The EGX30 In­dex in Egypt slid 1.1 per­cent, headed for the low­est close in al­most two weeks. The mea­sure gained 1.3 per­cent last week. Talaat Moustafa Group was the big­gest de­cliner, with a 3.9 per­cent re­treat, the sharpest drop since July. "The mar­ket re­acted prior to the in­au­gu­ra­tion of the new Suez Canal pro­ject and not af­ter that," Mo­hamed Rad­wan, the head of eq­ui­ties at Pharos Hold­ing, said by phone from Cairo. "It's a mat­ter of liq­uid­ity and ap­petite rather than mi­cro news."

Egypt, the most pop­u­lous Arab coun­try, un­veiled an $8.5 bil­lion ex­pan­sion to the Suez Canal on Thurs­day, the first of a se­ries of projects the gov­ern­ment has promised to un­der­take to trans­form the coun­try af­ter years of tur­moil.

Is­rael's TA-25 In­dex slipped 0.3 per­cent. Opko Health Inc. led the declines, with a 9.2 per­cent drop, the sharpest re­treat De­cem­ber 2013.

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