Data provided by iNet BFA
Loading...
See More

Gulf stocks drop on Middle East worries

Mar 02 2011 15:41 Reuters

Related Articles

Stocks tumble as oil marches higher

US stocks edge lower, oil gains

Global concerns cap FTSE gains

Asian stocks rise, China's PMI slows

Stocks rise, US dollar falls

Rising oil drags on FTSE

 
London - Emerging markets slumped on Wednesday, as escalating unrest in the Middle East spooked investors, sending stock markets in Dubai and Saudi Arabia to multi-month and multi-year lows.

Popular uprisings that have toppled veteran rulers in Tunisia and Egypt, spread to oil-producing Gulf States Oman and Bahrain and seen violent conflict in Libya, have rattled investors' appetite for risk, with little turnaround expected in the near future.

"This is going to be a bumpy ride for the MENA region and is likely to take its toll on the rest of the world as well, particularly for oil prices," said Turker Hamzaoglu, MENA economist at BoA-ML.

"There are no countries in the region immune to the spillover from Tunisia and Egypt, we are going to have these headlines for quite a while."

Saudi Arabia's benchmark index dropped to a 22-month low, after suffering its largest decline in more than two years on Tuesday, with investors ditching stocks as online activists called for protests in the kingdom on March 11 and 20.

The cost of insuring debt in Saudi Arabia rose 9 basis points to 145 basis points, according to Markit - levels not seen since July 2009. One-year dollar/Saudi riyal currency forwards eased slightly off 2-year highs of 75 basis points set a day earlier - a higher figure points to a weaker currency in a year's time.

Indices in Dubai and Oman also plummeted. Dubai's benchmark extended declines to hit a six-and-a-half year low, while Oman's index  shed 1.5%, ending lower for the tenth session in 11.

The benchmark emerging equity index fell 0.4%, but emerging sovereign debt 11EMJ narrowed 2 basis points to trade 270 bps over US Treasuries.

The Thomson Reuters emerging Europe index also lost 0.2%.

Oil impact


Russia's index bucked the weaker trend, adding 0.7% to hover at 31-month highs thanks to the high prices for oil - a key source of revenue for Russia and a key driver of the rouble's gains in recent months.

The rouble surged to a more than 2-year peak against the euro-dollar basket after the central bank widened its trading band to deter speculators and allow more room for currency appreciation that will help it battle inflation.

"A wider, stronger corridor, rouble-bullish policymaker rhetoric and high oil prices make continued rouble appreciation possible," analysts at JPMorgan said in a note, forecasting that the rouble would firm to 33.00 against the basket by mid-year, from 33.41 currently.

In contrast, markets in Turkey - which imports 95% of the crude it uses - continued to weaken. The main ISE 100 share index, which has fallen 11% this year, dipped 0.2%, while the benchmark bond yield hit its highest level since May.

Subdued risk appetite capped big moves in eastern Europe's currencies. Hungary's forint recouped losses, rising 0.3%, but the Polish zloty handed back gains of around half a percent after its central bank kept interest rates on hold in a decision that had been a tight call.

Robust domestic demand helped Poland's economy grow 4.4% year-on-year official data showed, but a slim majority of analysts polled by Reuters had expected the central bank to hold off raising rates despite concerns over rising inflation.

"The latest comments from (Governor Marek) Belka and other MPC (Monetary Policy Committee) members suggest there might be a pause for while, the mindset now is for unchanged rates," said Luis Costa, head of CEEMA fixed income and currency strategy at Citi.
egypt  |  libya  |  markets  |  oil
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

A cash flow crunch often occurs in small businesses trying to balance cash coming in with cash going out. Watch this video to help you improve.
 
 

OneRandMan learns how money really works

National Savings Month is not only this month, it is every month from your very first salary slip, an expert warns OneRandMan and all South Africans.

 
 

Start saving...

Time the key for retirement saving
Dummy's guide to saving
Save money with affordable account
All about endowments

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...