Middle East stocks fall as regional investors cash out; Qatar hits two-year low

Middle East stocks fell as Arab investors cashed out of regional on Tuesday after oil prices dropped to near a seven-year low, with all regional markets ending the day lower. Brent futures hovered just above $40 and US crude broke below $37, levels last seen during the credit crunch of 2008/09. Qatar's benchmark index plunged 3.1 percent, hitting a two-year low.
"The most liquid stocks were hit the hardest," said a Doha-based fund manager. Masraf Al Rayan and Vodafone Qatar tumbled 4.7 and 3.4 percent respectively. Qatar Gas Transport Co bucked the trend, rising 1.5 percent, as passive fund managers continued to add the stock after the company joined the MSCI emerging market index last week. Dubai's index dropped 3 percent to 3,011 points, taking its reversal this calendar year to more than 20 percent. Any break below the support at 2,992 could be met with buyers, technical analysts said.
Drake and Scull and Emaar Properties - two favourite stocks of retail traders - both dropped 3.4 percent. Abu Dhabi stocks tumbled 2.4 percent to a two-week low as Monday's 0.3 percent gain was wiped out. Financial stocks were the main drag, with Abu Dhabi Commercial Bank dropping 6.5 percent and First Gulf Bank losing 2.5 percent.
Etisalat, whose value makes up a third of the bourse, fell just 0.3 percent. Sebastien Henin, head of asset management at Abu Dhabi-based The National Investor, attributed this to its MSCI inclusion last week. Saudi's index breached technical support at 7,000, closing down 2.5 percent at 6,991 points as financial and retail stocks led all sectors lower. The renewed weakness among Saudi stocks - the index hit a 35-month low in November - comes despite improving economic data.
Growth in the kingdom's non-oil private sector accelerated last month from a record low in October, a survey of businesses showed on Monday. "The Saudi economy is adjusting to a new normal of lower oil prices," said Yazan Abdeen, head of regional capital markets at Saudi investment firm SEDCO. "Sectors like education, healthcare and retail will have potential upside because we do not anticipate the government to curb spending in those sectors in the upcoming budget." Those will be long-term plays, he said.
Saudi's budget for 2016 is expected to be announced this month. Egyptian stocks fell for a second day, declining 2.5 percent to 6,608 points, as Arab investors cut their positions, bourse data showed. Qalaa Holdings, one of Egypt's largest investment firms, dipped 4.1 percent after it reported on Tuesday a loss of 125.5 million pounds ($16 million) in the third quarter, compared with a 59.52 million Egyptian pound loss last year. Global Telecom Holding slumped 7.4 percent to 2.06 Egyptian pounds, having rallied 28 percent up to Monday's close from November 30 on take-over speculation.