Register for our free newsletter

Latest News

Concerns over Greek economy weigh on oil prices, impact regional markets

Regional indices declined Tuesday, on falling oil prices and flagging global markets.

May 12, 2010 10:17 by

Middle East stocks fell on Tuesday, weighed by falling oil prices and downbeat global markets as a relief rally ignited by a $1 trillion plan to aid Greece gave way to doubts on how it will cut its budget deficit.

Petrochemical stocks, seen as a proxy to world trade, were the main drag on Saudi Arabia’s index. The Kingdom’s Tadawul All-Share Index (TASI) fell for a fifth session in seven, dropping 1.1 percent, as sentiment soured in the world’s top oil exporting region.

The market on Tuesday shed almost all gains it saw the previous day, the Financial Transaction House (FTH) said in its daily market commentary.

Only two sectors – retail (0.47 percent) and insurance (1.35 percent), gains. Losses ranged from 1.99 percent in petrochemical industries to 0.09 percent in cement. Overall market breadth was negative with 30 advancers and 93 decliners, recording an AD ratio of 0.32.

Oil was down 1 percent at $76.01 a barrel at 1238 GMT. Oil has fallen 12 percent since May 3 as worries over Greece’s debt crisis weighed on the outlook for euro zone economies and their future demand for fuel.

Saudi Basic Industries Corp (SABIC) dropped 1.9 percent and Saudi Kayan fell 2.8 percent.

Dubai’s index lost 2 percent to a two-month low as long-term investors remained aloof, while day traders cashed in Monday’s gains.

“The UAE outlook is unclear as we wait for Dubai World’s debt issues to be completely sorted out so we can return to fundamentals,” said Musa Haddad, head of the MENA equity desk at National Bank of Abu Dhabi.

“Right now, the market is not building any bases, it is just moving up and down in a range. That’s why trading is coming from retail investors, not institutions – it’s better for them to sit on the sidelines. There’s no reason to buy and hold positions for the longer term.”

A deal between creditors and indebted state-owned conglomerate Dubai World could be finalized within two weeks, a top official said on Sunday.

Dubai-listed telecoms operator du fell 1.2 percent, outperforming the index, after its quarterly net profit more than quadrupled.

“The company continues to surprise in terms of subscriber additions and is able to capture more of the market,” said Marise Ananian, vice president, telecoms, at EFG-Hermes.

Kuwait stocks fell for a sixth day in seven as the first-quarter earnings deadline nears.

“Only about 70 companies have published their results so far and the deadline is looming, so investors want to offload stocks before they get suspended,” said a Kuwait-based trader who asked not to be identified. “We come back to the fundamental problem that Kuwait’s market lacks transparency and control.”

Kuwaiti companies must report their quarterly earnings by May 15 or face a possible suspension.


Tags: , , , , , , , ,

Leave a Comment