DUBAI: Gulf stock markets may come under pressure on Tuesday after oil prices slipped and Standard and Poor's cut credit ratings and outlooks for several countries in the region.
Brent crude slipped 1.2 percent to $57.65 per barrel by 0455 GMT as the International Energy Agency (IEA) said the United States would remain the world's top source of oil supply growth until 2020, defying expectations of a more dramatic slowdown in shale output growth.
Also, S&P on Monday cut its sovereign debt ratings for Bahrain and Oman, the two Gulf states set to come under most stress from oil's plunge, and revised to negative its outlook on Saudi Arabia, where it said the government may face sustained fiscal deficits in coming years.
At the same time, the agency affirmed the ratings of Qatar and Abu Dhabi.
S&P's actions could have the most impact on entities from those countries which borrow abroad, such as Bahraini and Omani banks. Also, in Saudi Arabia S&P revised to negative the outlook for property developer Dar Al Arkan, citing its heavy spending on land acquisitions last year.
Dar Al Arkan shares have surged 27.9 percent this year, well ahead of Saudi Arabia's stock index, which has gained 12.7 percent.
For Bahrain's market, another negative factor is the decision by Aluminium Bahrain (Alba), owner of one of the world's largest aluminium smelters, to cut its 2014 dividend payout despite higher profit.
The firm proposed a total dividend of 37.9 million dinars ($100.5 million) for last year versus 2013's payout of 50.7 million dinars. It did not give per-share numbers. Its annual net profit for 2014 was 96.4 million dinars, up from 79.7 million dinars in 2013.
Meanwhile, rating agency Moody's published a report on Monday highlighting Egypt's improving fiscal position thanks to cheaper oil.
"Egypt's spending on fuel subsidies in the current fiscal year could be around 30 percent lower than budgeted," it said.
On global markets, Asian shares are neutral-to-negative as nervousness over Greece potentially withdrawing from the euro and escalating conflict in Ukraine have sapped risk appetite.
Comments
Comments are closed.