A Saudi investor monitors share prices at the Saudi Stock Exchange (Tadawul). The main stock index yesterday fell 2.9% to a seven-month closing low of 8,197 points.
Reuters/Dubai
Major Middle East stock markets plunged yesterday after tumbling Chinese equities put pressure on global oil and commodity prices.
Qatar’s market slipped 0.6%, still supported by expectations of more foreign investment after its weighting in MSCI’s emerging markets index was increased. Ezdan Holding, one of the stocks whose weighting will be boosted at the end of August, climbed 0.2%.
Chinese stocks fell more than 6% yesterday as the yuan weakened against the dollar, raising fears that Beijing may further devalue its currency. That could decrease China’s consumption and imports.
Saudi Arabia’s main stock index fell 2.9% to a seven-month closing low of 8,197 points.
The index fell this week below technical support around 8,500 points, where it had bottomed in March and April. That triggered a double top formed by the March and April peaks, which points to December’s low of 7,226 points in coming months.
The economics department of local lender Samba Financial Group said in a report yesterday government spending had supported Saudi economic activity throughout the first half of this year despite oil’s plunge.
“However, the picture has begun to change recently with the persistence of low oil prices now beginning to have an impact on government spending, confidence and private activity,” it said.
“We expect a weaker trajectory of spending (in fact, a half-on-half contraction seems likely) as we move through the rest of 2015 and into 2016.”
London-based Capital Economics said in a report the Saudi economy appeared to be growing at an annual rate of more than 5% at the end of the second quarter, buoyed by rising oil output. But the impending return of Iranian oil to the market after the lifting of sanctions meant Riyadh was likely to have little scope to raise oil output further.
Meanwhile, fiscal policy looks set to become less supportive, so economic growth is set to slow to around 1.5% in 2016, below analysts’ consensus expectations of 2.5%, it argued.
Petrochemicals giant Saudi Basic Industries, for which China is an important market, fell 1.7%. Saudi Arabian Mining Co (Ma’aden) tumbled 5.8% as the Chinese equities rout depressed metals prices.
Many Saudi small-caps, especially insurance companies, fell their daily 10% limits.
Healthcare was the only bright spot. Health insurance will become mandatory for most visitors to the kingdom in the fourth quarter, the local newspaper Al-Watan reported, citing the supervisory body Council of Cooperative Health Insurance.
Dallah Healthcare added 0.6%, Saudi Pharmaceutical Industries rose 0.4% and Mouwasat Medical Services edged up 0.2%.
Dubai’s index dropped 2.5% to a four-month low of 3,828 points, falling below technical support at its May low of 3,913 points.
Builder Arabtec, which posted its third quarterly loss in a row this week, suffered one of the biggest price falls, tumbling 4.6%.
The most traded stock, heavyweight developer Emaar Properties, dropped 3.0%. Stock exchange data showed selling pressure in Dubai mostly came from foreign and institutional investors.
Abu Dhabi’s main index fell 2.0%, its biggest daily loss since early January. Abu Dhabi National Insurance Co, which this month said it had swung to a loss in the first half of 2015, sank its daily 10% limit.
Egypt’s leading index dropped 2.6% to 7,398 points, its lowest close since February 2014, falling below chart support at its July low of 7,527 points.
Although Egypt is a net oil importer and should benefit from lower oil prices, its close economic ties with the Gulf - including overlapping investor bases - have led the Cairo bourse to move in sync with the Gulf in the last few days.
Elsewhere in the Gulf, Kuwait’s index slipped 0.02% to 6,195 points; Oman’s index lost 0.5% to 6,191 points, while Bahrain’s index fell 0.2% to 1,329 points.
