Foreign investors continue selling on Gulf bourses
Most Gulf Arab stock markets fell in low-volume trading yesterday as foreign investors exiting emerging markets extended a regional sell-off that has taken three Gulf bourses into bear market territory.
Oman's benchmark dropped most sharply, shedding more than two per cent as foreign institutions booked profits to compensate for losses in other global stock markets. Bourses in Saudi Arabia, Qatar and Bahrain also ended lower.
"What's happening in the region is very much unfortunately linked to what is happening globally," said Haissam Arabi, managing director of asset management at Shuaa Capital.
A flood of foreign investment in the first half of the year had taken regional bourse to record or multi-month highs.
But non-Gulf investors have led selling in regional stocks since last month as a dollar rally made dollar assets more attractive and global stock markets fell on concerns about the health of the world economy.
"Some foreign hedge funds that had used leverage have been forced to unwind their positions – and one of the only places they have made money is the Middle East," said Shuaa's Haissam Arabi.
Oman's Muscat Securities Market 30 Index lost 2.3 per cent to 9,189.07, its lowest close since February 3. Qatar's Doha Securities Market Index declined 1.3 per cent to 10,245.29 an April 9 low. The Abu Dhabi Securities Exchange General Index slipped 0.2 per cent.
Bank Muscat, Oman's largest lender, declined to its lowest in 11 months. Industries Qatar slid to its lowest in almost a week.
Bank Muscat dropped 1.7 per cent to 1.485 rials (Dh14), its lowest since October 2. Industries Qatar, the largest publicly traded company in the Gulf emirate, slipped 1.4 per cent to 162.3 riyals (Dh164).
"The drop in oil price combined with high inflation is decreasing the appeal of Gulf markets to foreigners amid a general lack of interest from local investors," Mohamed Salem, a trader at Al Futtaim HC Securities in Dubai, said in a telephone interview. "Foreign institutions are exiting emerging markets as they try to cover positions in the United States."
Crude oil for October delivery dropped as much as $2.39, or 2.2 per cent, to $107.32 a barrel on the New York Mercantile Exchange. Oil is down about $37 from its July record. Inflation in Saudi Arabia, the biggest economy in the Middle East, accelerated to a record 11.1 per cent in July.
Saudi Arabia's Tadawul dropped for a third day, falling 1 per cent.
The Kuwait Stock Exchange Index gained 0.4 per cent, ending seven days of declines. The Bahrain All Share Index lost about 0.4 per cent.