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Business News/ News / World/  Mideast stocks sink on fear attacks may spread in Gulf nations
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Mideast stocks sink on fear attacks may spread in Gulf nations

The DFM General Index dropped 2.2%, the most since 11 June and Kuwait's SE Price Index slipped 0.2% to the lowest since December after the Kuwait attack

Kuwaiti security forces gather outside the Shiite Al-Imam al-Sadeq mosque after it was targeted by a suicide bombing during Friday prayers on 26 June 2015, in Kuwait City. Photo: AFPPremium
Kuwaiti security forces gather outside the Shiite Al-Imam al-Sadeq mosque after it was targeted by a suicide bombing during Friday prayers on 26 June 2015, in Kuwait City. Photo: AFP

Dubai/Tel Aviv: Stocks in Dubai, the Middle East’s commercial hub, led regional declines on concern militants could target other Arab Gulf nations after Kuwait’s deadliest attack in decades killed 27 people.

The DFM General Index dropped 2.2%, the most since 11 June, to 4,055.97 at the 2pm close in the emirate. Kuwait’s SE Price Index slipped 0.2% to the lowest since December. More than 200 people were wounded when a bomb ripped through a Shiite mosque in the country, which shares borders with Iraq and Saudi Arabia.

The attack was one of four on Friday. A gunman killed at least 38 people in the Tunisian seaside resort of Sousse, a person was decapitated at a gas plant in southeastern France owned by Air Products & Chemicals Inc., and in Somalia, Al- Shabaab militants said they killed about 30 African Union peace keepers.

“The attack in Kuwait is the first in a long time outside of Bahrain and Saudi Arabia, where we’re now used to seeing such things," Muhammad Shabbir, the head of equities at Rasmala Investment Bank Ltd., said by phone from Dubai. “Investors are worried that Islamic State is spreading and it could threaten peace and businesses in the region. They’re waiting to see how governments will respond to this threat."

The suicide bomber who carried out the attack was a Saudi national who flew into the country on Friday, state-run Kuna news agency said, citing an Interior Ministry statement. The authorities are searching for accomplices in this “blatant crime," the ministry said. It’s the deadliest attack since a string of bombings by Shiites in the 1980s. The Gulf nation is home to about 6% of the world’s proven oil reserves.

Saudi Arabia’s Tadawul All Share Index decreased 1.5% at 1.17pm in Riyadh. Abu Dhabi’s ADX General Index fell 0.9%, Qatar’s QE Index measure lost 0.4%, Bahrain’s BB All Share Index slipped 0.2%. The Bloomberg GCC 200 Index, which tracks the top 200 equities in the six- nation Gulf Cooperation Council, declined the most in three months.

Greek debt

The militant attacks exacerbated negative sentiment in financial markets from Greece’s ongoing debt crisis. Europe’s markets face a torrid start to trading on Monday after Greek Prime Minister Alexis Tsipras called for a referendum on demands international creditors made on his nation in return for financial aid.

Tsipras called the vote for 5 July—after the scheduled expiration of Greece’s financial bailout—and ministers including the Greek defense chief urged the country to reject it.

“Greece isn’t helping the situation in our stock markets right now," Tariq Qaqish, a fund manager at Al Mal Capital PSC in Dubai, said by telephone. “If Greeks reject the bailout terms, it will impact Europe’s economic growth potential. That will affect the demand for oil, which may lead to lower oil prices, which isn’t good news for the region."

Oil prices

The GCC holds about 30% of the world’s proven oil reserves, and most governments rely on income from crude or gas to fund their budgets. The euro zone’s economy is forecast to grow 1.5% this year, almost double the rate last year, according to 56 economists’ estimates compiled by Bloomberg.

Uncertainty over Greece’s future has also impacted Israeli stocks. Three of Israel’s top five trading partners, the Netherlands, Germany and Belgium, are part of the European Union. The TA-25 Index of equities in Tel Aviv slumped as much as 1.8%, the most since October. Bank Leumi Le-Israel Ltd. was the biggest contributor to the decline after it sank as much as 2.9%. The index was headed for its first monthly drop since January.

Israel’s gas

Gas-related shares in Tel Aviv also contributed to the decrease after lawmakers failed to reach an agreement on Israel’s gas policy at a cabinet meeting on Thursday. The TA-Oil & Gas Index slipped 2.3%, the most since 28 April.

Disputes over ownership and pricing have held up the production from the offshore Leviathan gas field, controlled primarily by Houston-based Noble Energy Inc. and Israel’s Delek Group Ltd.

“The ball is now in the court of the Knesset to a degree, so the uncertainty has increased," Steven Shein, a trader at Tel Aviv-based Psagot Investment House, said by e-mail.

Egypt rises

Egypt’s EGX 30 Index is the Middle East’s only stock gauge to rise more than 0.2% today. The measure increased 1.2%, the most in more than a month, as investors sought opportunities in property-related companies after Emaar Misr for Development SAE’s share offering last week. Real estate company Talaat Moustafa Group led the gain with a 2.3% jump.

“Many people realized that they won’t get the allocations they wanted, so they started looking at better opportunities in the market," Ahmed Salem, chief executive officer of Beltone Securities, said by telephone from Cairo. Bloomberg

Fiona MacDonald in Kuwait contributed to this story

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Published: 28 Jun 2015, 05:33 PM IST
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