Off the wire
• Li Keqiang urges sound implementation of two-child policy  • 1st LD: China suspends stock market "circuit breaker"  • Urgent: Somalia cuts diplomatic ties with Iran: gov't  • First Slovak satellite to be launched into space in May  • Iran bans import of Saudi goods  • Summernats car festival attracts thousands in Australian capital city  • Bulgaria, U.S. deepen drug enforcement cooperation  • Urgent: China suspends circuit breaker mechanism  • Urgent: Syria gov't agrees to allow aid into besieged town  • China confirms contact with DPRK embassy after nuclear test  
You are here: 　 Home

Gulf exchanges react to global market rout, oil price slump

Xinhua, January 7, 2016 Adjust font size:

Gulf Arabian stock market indexes lost across the board Thursday after the Chinese currency yuan hit a five-year low and the oil price touched an 11-year low.

The Saudi Arabian stock market index Tadawul All-Share plummeted 4.49 percent, finishing at 6,225.22 points amid an advance-decline ratio of four to 162.

The oil price rebound on Saudi-Iranian tensions at the beginning of the week were short-lived with the barrel (159 liter) oil losing 3.2 percent earlier in the day, touching an 11-year low at around 32 dollars (Brent).

Due to the oil price slump, the IMF predicts that the Saudi GDP growth rate would decline to 2.2 percent in 2016, down from 3.4 percent last year.

Before Arab markets opened on Thursday, the yuan's central parity rate lost 332 basis points to 6.5646 against the U.S. dollar, the lowest level since March 18, 2011, according to data from the China Foreign Exchange Trading System (CFETS).

Trading on the stock markets in Shanghai and Shenzhen was suspended early after market indexes dived by over seven percent. Stock gauges in the rest of the East Asia and Europe closed in red, too.

In Dubai, the FTSE NASDAQ Dubai UAE 20 Index closed 4.22 percent lower at 2,870.89. The benchmark index measures the performance of United Arab Emirates (UAE) blue chips traded on the Nasdaq Dubai, the local Dubai bourse DFM and the Abu Dhabi-based ADX.

Financial were hit hard in particular. Emirates NBD, the first lender in the UAE, lost 5.41 percent. The world's third largest port operator Dubai Ports World ended off 3.65 percent.

Earlier in the day, Emirates NBD said the UAE purchasing managers index fell from 54.5 in November to 53.3, marking the lowest reading since August 2012.

"However, softer non-oil growth in the UAE last year is likely to have been partially offset by robust oil sector expansion, and we remain comfortable with our estimate of 4.0 percent real GDP growth in 2015 down from 4.6 percent in 2014," said Khatija Haque, head of Middle East and North Africa Research at Emirates NBD.

The bank's projection is higher than the 3.1 percent growth the IMF predicts for the UAE this year. "Weakening growth and sharply lower commodity prices have narrowed the room for policy makers to respond, especially in commodity-exporting countries, should risks materialize," the World Bank said in a study on the outlook for 2016 published earlier in the year.

The ongoing regional tensions added to the rout. Iran claimed earlier in the day that Saudi forces had hit the Iranian embassy in Yemen's capital Sanaa with a missile.

In Doha, the Qatar 20 Index fell by 3.02 percent, while the Bahrain All-Share Index in Manama performed relatively well, losing only 0.67 percent. Like in the UAE, Bahrain banks came under the wheels of the regional sell-out, with Gulf Finance House diving 9.68 percent. Endit