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29 March 2024

Dubai bourse posts biggest drop in 6 years

Dubai's stock index posted its biggest daily drop in six years on Thursday. (Supplied)

Published
By Reuters, AFP

Dubai's stock index posted its biggest daily drop in six years on Thursday and Abu Dhabi's loss was the worst in five years as panic selling spread across the Gulf after oil dropped to a fresh five-year low.

The Dubai index sank 7.4 per cent to 3,595 points, falling below major technical support at 3,731 points, its July trough, and hitting its lowest level since January.

The main index in Abu Dhabi tumbled 4.7 per cent. Oman's bourse lost 4.2 per cent and Qatar was down 4.3 per cent.

"What we see is panic selling - people sell whatever they can irrespective of valuations," said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.

"I don't see any reason for this to stop unless oil price uncertainty is removed."

The price of Brent tumbled on Wednesday to $63.56 per barrel on comments by Saudi Arabia's oil minister again implying that Riyadh would make no output cut. It ticked up early on Thursday but still traded below $65.

Economists do not expect growth in the big Gulf economies to be seriously hit if oil stays at current levels, because governments have huge fiscal reserves which they can use to maintain spending even if they run budget deficits.

But oil's quick drop is having a psychological impact on retail investors who dominate trading in the Gulf markets and who want to lock in profits after big gains in the past 18 months. In Dubai in particular, selling may be magnified by margin calls and investors raising money to repay bank loans which they took out to buy stocks on the way up.  

Gulf stocks plummet

Stock markets of the energy-rich Gulf states fell sharply on Thursday, many of them breaking key psychological barriers, after oil dived to new lows.

The Dubai Financial Market Index slumped 7.2 per cent at one point before recovering slightly. In mid-session, the DFM Index was down 6.2 per cent at 3,641.0 points after diving below the 3,700-point level. All leading shares fell sharply.

The Saudi Tadawul All-Shares Index slumped more than three per cent just minutes after the start to trade below the psychological 8,200-point mark. The market leader, petrochemicals giant Sabic, lost more than five percent.

The Qatar Exchange, the second largest in the Arab world after the Saudi, dropped four percent to below the 12,000-point level. All sectors were in the red.

The Abu Dhabi Securities Exchange, which normally moves within a small range, shed 4.2 per cent to trade at 4,388.71 points. It was under pressure from the banking, financial and real estate sectors, which lost the most.

The Kuwait Stock Market lost 2.1 per cent to 6,427.25 points, dropping below the 6,500-point level.

The Muscat Stock Exchange lost 3.5 per cent to trade below the 6,000-point mark while the Bahrain Stock Exchange was down 0.43 per cent.