Reuters – Gulf markets stumbled on Thursday as investors cut their exposure while they await signs that oil prices have found a floor and for state budget announcements.
Saudi Arabia’s Tadawul All-Share Index (TASI) slid 0.7 percent to 6,949 points, falling within 115 points of November’s 35-month low.
Trading volumes hit a week-high, but remain well below the three-month average ahead of Saudi Arabia’s annual budget announcement later this month.
“Investors are holding off entering the market,” said a Riyadh-based portfolio manager. “The budget announcement will be the decisive factor (for deciding) trade positions.”
The budget’s monetary value will indicate the extent to which slumping oil prices have weakened the government’s finances, the trader said.
The budgetary allocations to each sector will also shape economic activity in those industries and so are also of great interest to investors, he added.
Crude prices fell below $40 at 1325 GMT. Global oversupply has gripped oil markets despite lower US crude inventories this week.
The sustained slump in oil prices has hurt state finances in the Gulf and soured sentiment among both regional and foreign traders, with government spending a major factor in determining private sector profitability.
Dubai’s index dropped 1.9 percent, dragging the bourse down to its lowest close in over two years.
Drake and Scull plunged 3 percent to 0.38 dirhams, tumbling to a record low since going public in 2009.
The construction company was not the only stock to suffer in investors’ rush to sell. Arabtec and Emaar Properties tumbled 4.8 and 4.5 percent respectively, hitting multi-year lows.
“Real estate stocks are the biggest losers because they are favored by retail investors,” said Julian Bruce, head of institutional trading for Egyptian firm EFG Hermes.
“Falling real estate prices is just making a bad situation worse.”
Residential property prices in Dubai have declined in five successive quarters and are likely to fall a further 3-5 percent over the next 12 months, industry consultants Cluttons wrote in a report in November.
Abu Dhabi’s benchmark rose 0.1 percent, recovering from an early-session low.
Blue-chips Etisalat and First Gulf Ban — collectively making up 48 percent of the index’s market capitalization — rose 0.3 and 0.4 percent respectively, supporting the bourse.
Qatar’s index slipped 0.04 percent to 10,015 points, a new 25-month low.
Egypt’s main benchmark climbed 0.1 percent in thin trade. Commercial International Bank COMI.CA (CIB) rose 1.1 percent to 35.73 pounds and accounted for about a quarter of the value traded.
NBK Capital published a note that adjusted its fair value for CIB to 51.3 Egyptian pounds from 64.40 Egyptian pounds after the bank completed a 25 percent bonus share issue, reiterating a “buy” recommendation.
Both foreign and Arab investors were net sellers, bourse data shows.