Disappointing company earnings, falling oil prices and a wave of terrorism culminating in Friday’s attacks in Paris unsettled investors across Middle Eastern markets.
Property-related equities led the retreat after Drake & Scull International PJSC became the latest United Arab Emirates construction company to report losses. Emaar Properties PJSC was the biggest contributor to declines in Dubai’s DFM General Index, which shed 3.5 percent at 12:20 p.m. local time, the most since Aug. 24. Saudi Arabia’s Tadawul All Share Index lost 2.7 percent, poised for the lowest level since January 2013.
Drake & Scull joins larger rival Arabtec Holding Co. in reporting losses because of what it called “challenging market conditions” after a more than 40 percent drop in Brent crude prices in the past 12 months led to deferred payments and project declines across the six-nation Gulf Cooperation Council. Oil prices may decline further after stockpiles expanded to a record of almost 3 billion barrels because of strong output from OPEC and elsewhere, the International Energy Agency said on Friday. Most governments in the region rely on income from crude to fund spending.
“It’s been a pretty negative weekend overall and the markets are responding to that,” Saleem Khokhar, the head of equities at the asset management group of National Bank of Abu Dhabi PJSC, the U.A.E.’s biggest bank. “For us, it doesn’t change the underlying economics of the region.”
Teams of Islamic State-backed gunmen killed 129 people in several sites across the French capital over the weekend, attacks that President Francois Hollande called an “act of war.” A day before the attack, two suicide bombs exploded minutes apart in Beirut, killing at least 43 people. There is growing evidence that a bomb may have downed a Russian Metrojet plane over the Sinai peninsula last month.
Drake & Scull
Drake & Scull posted an 877.8 million-dirham ($239 million) attributable net loss in the three months through September, compared with profit of 21.4 million dirhams a year earlier, according to a statement to the Dubai bourse on Sunday. The shares slumped 10 percent.
“Drake & Scull results are adding oil to the fire,” said Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi.
Qatar’s QE Index traded 0.9 percent lower, headed for the 14th straight day of declines, the longest losing streak on record. Index provider MSCI Inc. said on Friday it will remove Gulf International Services QSC from its emerging markets gauge this month and replace it with Qatar Gas Transport Co. Gulf International fell 4 percent to the lowest level since August.
Dana Gas PJSC, the United Arab Emirates energy company producing oil and gas in Egypt and Iraq, was the most-traded stock in Abu Dhabi after it posted its biggest quarterly loss since 2009 amid a 47 percent slump in revenue. The company’s shares fell 7 percent. Abu Dhabi’s ADX General Index dropped 2.6 percent.
Gauges in Kuwait and Bahrain slipped 1.1 percent and 0.8 percent, respectively. Oman’s MSM 30 Index lost 0.1 percent.