Gulf shares battered as oil price dive deepens

A fresh wave of panic selling wiped out $49 billion of stock market value across the Gulf states on Tuesday as the price of Brent crude oil dropped below $60 a barrel for the first time since 2009.
Saudi Arabia’s stock index registered its biggest daily loss in six years on Tuesday as the Tadawul All-Share Index (TASI) tumbled 7.27 percent to 7,330.3 points, its lowest level since June 2013.
The index has dropped 34 percent from its September peak and 14.12 percent or 1,205.30 points so far this year. The Gulf stock market losses came on top of over $200 billion of value already destroyed since the end of October, Reuters said.
John Sfakianakis of Ashmore Group, told Arab News: “Oil has plunged once again below the $60 mark for Brent and there is selling happening at different levels, today’s reaction was acutely expressed due to those levels being breached.”
Basil Al-Ghalayini, CEO of BMG Financial Group, said: “The speedy decline of oil prices breaking the $55 mark has sent further panic waves across the GCC stock markets. All sectors in Tadawul index have been negatively impacted.”
Reuters quoted Abdullah Alawi, assistant general manager and head of research at Aljazira Capital in Riyadh, as saying: Oil’s plunge had served as a catalyst for a correction in an overvalued market, whose trailing price-to-earnings ratio had almost reached 21 in September, exceeding blue-chip benchmarks such as the FTSE 100 and S&P 500.” He said: “That was way too expensive. Many stocks reached unrealistic valuations.”
The Dubai Financial Market led the way in a free fall, shedding more than eight percent during trading — the biggest single-day loss in more than five years — but resisted dropping below the key 3,000-point mark.
The DFM Index closed down 7.3 percent on 3,083.69 points, a 12-month low. Qatar’s index tumbled 3.5 percent and Kuwait lost 2.1 percent. Oman’s benchmark dropped 2.9 percent to 5,409 points, its lowest level since August 2012.