September 25, 2015

Gulf stocks plunge in Q3 on oil slump, China jitters

Drop in oil revenues will lead to cut in public spending

KUWAIT CITY - Share prices in the energy-rich Gulf states plunged 10.9 percent in the third quarter, driven lower by a slump in oil revenues and by jitters over the state of the Chinese economy.
All seven stock markets ended lower, not only for the quarter but on the 2014 close, with the heavyweight Saudi bourse leading the slide.
Their combined market capitalisation dived $120 billion (107 million euros) to $980 billion, according to the Arab Monetary Fund.
The International Monetary Fund has said Gulf states will lose around $300 billion in oil revenues and end 2015 with a budget shortfall.
Among the biggest buyers of Gulf oil is China.
\"The drop in oil revenues will lead to a cut in (public) spending,\" said Mohammed Zaidan, chief market strategist at Kuwait-based Orbex Brokerage. \"Most Gulf companies rely heavily on government expenditures.\"
\"Most investors are dumping part of their stocks and buying other assets as a consequence of the decline,\" which is expected to continue, Zaidan said.
The Saudi Tadawul All-Shares Index dived 18.5 percent to close the third quarter on 7,404.14 points. Its leading petrochemicals sector slumped a massive 45 percent.
The largest Arab stock market, it was also down 11.2 percent down on the year despite opening up to foreign investors.
The Dubai Financial Market Index dropped 12.1 percent in the third quarter, mostly in August, to finish at 3,593.28. It is 4.8 percent lower than the 2014 close.
Qatar Exchange, the second-largest Gulf market, ended the quarter down 6.0 percent and 6.7 percent since the beginning of 2015.
Kuwait dropped 7.7 percent, Oman 9.9 percent and Bahrain 6.7 percent, while Abu Dhabi lost just 4.6 percent.
Kuwait\'s bourse was the biggest loser on 2014, shedding 12.0 percent.

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