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Mideast Stocks Plummet, Saudi Firms Hit Hardest
World Economy

Mideast Stocks Plummet, Saudi Firms Hit Hardest

Stocks across the Middle East tumbled as the easing of sanctions against Iran raised the prospect of a surge in oil supplies to a market already reeling from the lowest prices in more than a decade.
Saudi Arabia’s Tadawul All Share Index dropped 5.4% to its lowest level since March 2011. In all, 167 stocks fell, while no stock showed a gain. Dubai’s DFM General Index also lost 5.2% by afternoon, its biggest loss in five months. The Bloomberg (P)GCC 200 Index, which tracks 200 of the six-nation (Persian) Gulf Cooperation Council’s biggest companies, traded at 9.5 times estimated 12-month earnings, the lowest in almost seven years.
The six-nation (P)GCC groups Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman.
Qatar’s QE Index fell 7%, while Abu Dhabi’s ADX General Index slumped 4.2% to the lowest level since November 2013. Oman’s MSM 30 Index dropped 3.2%, the most since December 2014. Kuwaiti stocks also lost 3.2%, plunging to the lowest level since May 2004, and Bahraini equities fell 0.4%.
Abu Dhabi’s ADX General Index slumped 4.2% to the lowest level since November 2013. It has declined 23% since a peak in July. Dubai’s DFM General Index lost 4.6% in the highest trading volume this year.
Meanwhile, in Egypt the main stock market index slid 5.2% Sunday in a broad-based sell-off, as foreign sellers divested Egyptian shares heavily through the week, causing panic among local investors in Cairo, Reuters said.

Companies' Stocks Fall
Saudi Arabia’s Al Rajhi Bank and Saudi Basic Industries Corp., one of the world’s largest chemicals manufacturers, were among the biggest contributors to the drop on the Tadawul, losing 2.4% and 3.7%, respectively.
The gauge has tumbled 35% over the past year as the slump in oil has hurt company profits linked to government spending. Oil revenue accounts for more than 70% of the Saudi Arabia’s income.
Saudi Arabian Fertilizer Co. retreated 6.2% to the lowest level since November 2009 after its fourth-quarter net income halved to 379 million riyals ($101 million). Yanbu National Petrochemical Co. slumped 5.9% to the lowest level since May 2009. The company’s fourth-quarter profit dropped 36%.
“Most companies are likely to report results this week and this can certainly influence short term direction," said Muhammad Faisal Potrik, the head of research at Riyad Capital. "However, if we look at dividend yields and expectations of oil prices one year out, some of the stocks are very attractively priced and long-term investors are unlikely to suffer losses if they start investing here."
The Tadawul’s 14-day relative strength index fell to 16 on Sunday, the lowest level since August. A reading below 30 suggests to some analysts that a security may be oversold.

Weakest Level
The Bloomberg (P)GCC 200 Index plunged to the weakest level since March 2011 as every benchmark gauge in the region fell.
“Oil breaking below $29 oil price has urged more investors to sell," said Talal Touqan, the head of research at Abu Dhabi-based Al Ramz Securities.
Oman’s MSM 30 Index fell 3.2%, the most since December 2014, and Kuwaiti stocks also lost 3.2% to the lowest level since May 2004. Bahraini equities slipped 0.4%.
Bonds across the Persian Gulf Arab region slumped on Friday. The yield on Saudi Electricity Co.’s bonds due April 2043 surged 32 basis points, the most on record, to 6.93%. In the absence of dollar-denominated sovereign debt in Saudi Arabia, some investors use the company’s bonds as a proxy because the state owns more than 70% of the energy operator.
The yield on Qatar government’s debt due January 2020 bond climbed 14 basis points to 2.97%, and the rate on Dubai’s notes due April 2029 increased 23 basis points, prices compiled by Bloomberg show.

 

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