After Brent oil fell below $55 a barrel for the first time since May 2009, every major stock market in the Gulf region slipped, with Dubai shares retreating the most in the world.
The Tadawul All Share Index in Saudi Arabia, where income from hydrocarbon sales accounted for almost 90 percent of government’s estimated revenue last year, sank 3.4 percent.
The DFM General Index (DFMGI) lost 5.2 percent to 3,381.30 at 12:09 p.m. local time, the biggest decline among more than 90 gauges, as Bloomberg reports.
The ADX General Index in Abu Dhabi, whose oil-based economy accounts for about half of its gross domestic product, lost 2.3 percent to the lowest since Dec. 18.
“With crude continuing its downward trend, regional markets are selling off once again with a vigor,” Ramez Merhi, a Dubai-based director for asset management at Al Masah Capital Ltd., which manages $500 million, said by e-mail.
“Oil looked as though it would consolidate at the $60 level just before the end of the year. But it couldn’t, hence, there’s been an aggressive selling reaction from equity investors this year.”
With oil losing more than $50 a barrel in 12 months, investors are wary of putting their money in a region where governments rely on oil revenue to fund their budgets.
Brent crude decreased 5.9 percent yesterday, sparking a global equities rout that saw the S&P 500 (SPX) drop for a fourth day, its longest losing streak since December 2013.
The Stoxx Europe 600 Index slid 2.2 percent yesterday and MSCI Emerging Market Index fell 1 percent. Oil declined another 1.2 percent today.
At least six stock indexes in the Gulf Cooperation Council, home to about a third of the world’s proven oil reserves, fell into bear markets since November after Brent plunged.
