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New York - 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 June 11, to 4 055.97 at the 14:00 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 south-eastern France owned by Air Products & Chemicals 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, 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 stocks
Stocks in Saudi Arabia, which is no stranger to militant attacks, slumped as much as 2.2%.
“There’s an initial shock that the bomber in Kuwait was Saudi, but the impact on stocks is purely psychological,” Ahmed Shehada, the head of advisory and institutions at NBAD Securities LLC, said by telephone. “Nothing has changed fundamentally.”
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 1.3% at 15:16 in Dubai, the most in three months.
Greek debt
The militant attacks exacerbated negative sentiment in financial markets from Greece’s continuing 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 July 5 - after the scheduled expiration of Greece’s financial bailout - and ministers including the Greek defence 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 last year’s rate, 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 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.
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 2.5%, the most since April 28.
Disputes over ownership and pricing have held up the production from the offshore Leviathan gas field, controlled primarily by Houston-based Noble Energy and Israel’s Delek Group.
“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%. The measure increased 1.3%, 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. Commercial International Bank Egypt SAE, which accounts for more than a third of the index, led the increase with a 0.4% rise.
“Many people realised 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.
