Gulf markets sink to multi-year lows as oil slips below $30

Middle East bourses fell sharply yesterday as investors cashed out after Brent crude oil slipped below $30 a barrel and global markets resumed selling off. The Saudi index tumbled 3.3% to close at 5,838 points, its lowest finish since March 2011, after a heavy wave of sales in the final hour of trade. Traders said margin calls added to the pressure, especially in smaller-capital stocks favoured by local speculators. Most insurance stocks, which are generally illiquid and therefore harder to exit, nosedived more than 6.0%. Petrochemicals were also a drag on the index, with the sector’s sub-index tumbling 3.1%. Saudi Kayan Petrochemical sank 8.7% after it reported a net loss for the fourth quarter - its largest since it listed in 2007, according to a note by NCB Capital. The company is an affiliate of Saudi Basic Industries Corp (Sabic), whose shares fell 2.2%. Major lenders National Commercial Bank and Banque Saudi Fransi gave back early gains and fell 1.7 and 2.2% respectively, even though their quarterly earnings beat analysts’ forecasts. But food producer Halwani Brothers climbed 2.5% after reporting a 63% rise in net profit. In Egypt, mass selling by global and regional fund managers, which started at mid-session on Wednesday, extended into yesterday’s session. The index sank 5.6% to 5,858 points, its lowest level since October 2013. Investment firm Qalaa Holdings was down 8.3% at 1.22 Egyptian pounds, a record low. “Foreign investors are exiting their positions and this is causing panic,” said a Cairo dealer. To a large extent, Egypt is simply being caught up in a broad emerging market downtrend. But investors are also concerned about the risk of a currency devaluation this year, as the country’s foreign reserves remain perilously low, and by disappointing growth. The economy is set to grow 4.1% this financial year, marginally weaker than the previous year and short of the government’s target, according to a Reuters poll of analysts published yesterday. UAE blue-chip lenders listed on the Abu Dhabi exchange, which have yet to report earnings, retreated with First Gulf Bank and Abu Dhabi Islamic Bank down 2.7% and 3.2%. Both lenders closed at multi-year lows. The index retreated 1.6% to 3,955 points, its lowest close in 13 months. Dana Gas, the largest listed energy company on the exchange, tumbled 4.1% and was the most traded stock. On Tuesday, the company said it planned to slash its head office workforce and continue to invest in Egypt, where it expects a boost in production. Dubai’s benchmark plunged 3.6% to 2,815 points, its lowest close since November 2013, in the heaviest trade this year. Construction firm Arabtec sank 9.5% and was both the worst-performing and most traded stock on the exchange. Builder Drake & Scull traded down 6.3%. Elsewhere in the Gulf, Oman’s index declined 1.7% to 5,113 points; Kuwait’s index retreated 1.6% to 5,266 points, while Bahrain’s index slid 0.1% to 1,201 points.