Low oil price weighs on Gulf stocks

SHARE prices in Gulf Arab states plunged yesterday on the first day of trading since Opec decided to maintain oil output, sending crude prices to five-year lows.

All the seven bourses of the Gulf Cooperation Council (GCC) states had been closed for the Friday-Saturday weekend after the Opec decision late on Thursday.

The Saudi Tadawul all-share index, the largest in the Arab world, slumped more than 6% to below the 9 000-point mark. All shares and all sectors were trading lower. Losses on the Dubai financial market deepened by mid-session, trading down 6.5% at around 4 200 points. All stocks in the index were in the red.

The Abu Dhabi securities exchange was down 1.0% at 4 753 points.

Kuwait stock exchange had dipped 3.0% to 6 776.50 points, while Muscat stock market had lost 5.6%.

Qatar exchange dived 4.4% below the 13 000-point mark less than five minutes after opening.

The Opec oil cartel on Thursday maintained its output ceiling unchanged despite sliding crude prices.

“This is a direct impact of the Opec decision and the fear from the low oil price consequences” on Gulf economies, vice-president of investment research at Kuwait’s KAMCO investments, Zaid Chehab, said.

The Opec decision was received positively by global stock markets because a drop in oil prices is expected to stimulate Gulf economies. On the contrary, a drop in oil prices would have reflected negatively on GCC budgets which generate about 90% of their revenues from oil. — AFP