World Economy

Mideast Stocks Sink

Mideast Stocks SinkMideast Stocks Sink

Saudi Arabian stocks declined to a five-week low, leading losses across most Middle Eastern equities, after the deputy crown prince triggered a slump in crude prices by placing the onus of reducing oil output on other countries.

The Tadawul All Share Index decreased 1.6% to close at 6,126.12, nearing the 50-day moving average it’s traded above for more than a month. Saudi Telecom Co. led the retreat in the first day of the exchange’s new trading hours. Dubai’s DFM General Index fell 1.6% and Kuwait’s SE Price Index slipped 0.4%.

Brent crude, a pricing benchmark for half the world’s oil, declined to $38.67 per barrel on Friday after Mohammed bin Salman told Bloomberg News that cutbacks in Saudi Arabia’s oil production must be coupled with that of other major producers, including Iran. His comments come weeks before a meeting in Doha this month to help limit output. Equities in the six-member (Persian) Gulf Cooperation Council (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) are closely correlated to the price of crude, which accounts for the bulk of government revenue.

 Saudi Aramco IPO

The plunge in oil prices has strained government finances in Saudi Arabia, leading to cuts in spending as well as lower domestic consumption. Three of the index’s four biggest decliners were banks that had their credit ratings downgraded by Standard & Poor’s on Thursday. Al Rajhi Bank, which has the largest weighting on the gauge, fell 0.7%. National Commercial Bank lost 2.6% and Saudi British Bank tumbled 6.4%, the most since December.

In a plan to diversify its economy away from oil, Saudi Arabia is seeking to sell a stake of Saudi Aramco on the stock exchange and create the world’s largest sovereign wealth fund, Salman said. The steps are intended to make the country more reliant on income from investment rather than oil within 20 years.

About 212 million Saudi Arabian shares were exchanged, 20% less than the 12-month daily average. Saudi Telecom dropped 4.2%.

 Abu Dhabi’s Taqa Loss

Abu Dhabi’s ADX General Index lost 0.7%, led by Aldar Properties PJSC’s 2.6% retreat. Trading volumes on the gauge were less than half the six-month daily average, according to data compiled by Bloomberg.

Abu Dhabi National Energy Co., the government-controlled utility otherwise known as Taqa, slid 6.1% on almost four times the three-month average trading volume. In addition to selling assets and reducing capital expenditure, the company plans to refinance $1 billion of debt due this year as lower oil prices hurt revenue.

Qatar’s QE Index dropped 1.2% and Bahrain’s BB All Share Index declined 0.4%. Egypt’s EGX 30 Index fell 0.1%. Oman’s MSM 30 Index bucked the trend, rising 0.4%.