Dubai: Gulf shares fell, led by real-estate companies, on concern declining crude prices will slow government spending in the region.
Emaar Properties PJSC dropped the most in more than a month after Credit Suisse cut its price target to more than half for the Middle East’s biggest developer. Sorouh Real Estate Co., Abu Dhabi’s second-largest property developer, had its biggest drop since November 10. Global Investment House closed at its lowest level in four years after Al Qabas reported an investor in the company lowered its stake.

The Dubai Financial Market General Index dropped 5.6 per cent to 1,802.77, bringing the slump in 2008 to 70 per cent. Abu Dhabi’s gauge lost 3.7 per cent, while the Kuwait Stock Exchange Index retreated 2.7 per cent.

 

“Investors are reacting to the massive fall in crude oil prices,” said Chamel Fahmy, senior regional sales trader at Beltone Securities Brokerage in Dubai. “This decline will impact the future growth and government spending.”
Crude oil for January delivery slid $2.35, or 6.5 per cent, to $33.87 a barrel in New York on December 19, the lowest settlement since February 2004. Futures tumbled 27 per cent since December 12, the biggest weekly drop since January 1991. Prices have slumped 77 per cent from the record $147.27 a barrel reached on July 11.

The drop in oil prices “threatens investment” and is “wreaking havoc,” Saudi Arabia’s Oil Minister Ali Al Naimi said on December 19. “A number of upstream projects have already been canceled or delayed.”

Saudi Arabia’s fiscal surplus would fall to zero at an oil price of $50 a barrel, Fitch Ratings said in a report last month. Kuwait would break even at $42 and Abu Dhabi at $31. For Bahrain the budget would balance at $74 a barrel, Fitch said.

The Oman’s Muscat Securities Market 30 Index fell 2.3 per cent, and the Bahrain All Share Index lost 2.1 per cent. In Qatar, DSM 20 index rose 0.3 per cent. Saudi Arabia’s Tadawul All Share Index gained 1.6 per cent, according to the exchange’s website. The measure tumbled 4.1 per cent on Saturday.

Emaar fell 9.9 per cent, its biggest drop since November 18, to Dh2.63 after Credit Suisse cut its target to Dh4.42 from Dh9.25 and maintained a “neutral” rating in a December18 report. Sorouh fell 9.8 per cent to Dh2.94.

Kuwait’s Global Investment House plunged 8.2 per cent to 280 fils, the lowest level since December 2004. Dubai Capital Group reduced its stake in the bank to 7 per cent from 10.38 per cent, Al Qabas reported, without saying where it got the information.

Standard & Poor’s cut its credit rating for Global last week on concern Kuwait’s biggest investment bank may not meet some repayment obligations.

Doha Bank QSC weakened 5.4 per cent to 42.1 riyals after Raghavan Seetharaman, chief executive officer of Qatar’s fifth- biggest bank by market value, said on December 18 he was “cautiously optimistic” about next year, which would be one “of consolidation”.