Black Tuesday for GCC stocks
Gulf stock markets were routed once again on Tuesday, with the region’s investors wilting under losses of Dh634 billion accrued over the past week.
The combined market capitalisation of the seven Gulf equity exchanges has fallen by 15 per cent, from Dh4.16 trillion to Dh3.53trn, since they opened for business a week ago. Saudi stocks have been worst hit, losing 21 per cent of their value over this period, while UAE investors have seen their shares drop 15 per cent in cash terms. This equates to UAE losses of Dh142bn in just five trading sessions.
The Dubai and Abu Dhabi markets on Tuesday endured their largest one-day declines since 2006, with losses of 6.2 and 6.8 per cent respectively. The Gulf markets have been victims of a vicious slump that has seen exchanges from New York to Tokyo plummet day after day as speculation over a US recession intensifies.
The global equity collapse prompted the US Federal Reserve to slash rates by 0.75 per cent in an emergency measure on Tuesday. Yet Wall Street appears unimpressed and the Dow Jones industrial average fell more than 300 points in the first hour’s trading.
Cutting interest rates typically bolsters stock markets and analysts have been quick to confirm the long-term health of the Gulf exchanges. “The regional sovereign wealth funds are not pulling out of the market and as long as they remain, investors shouldn’t worry,” said Krishna Murthy, Chief Executive of Al Rostamani financial services division.
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