Mideast equities drop over OPEC’s stand on oil output
Dubai stocks fell to a three-week low, leading declines in most Middle Eastern markets, after OPEC decided to forgo an output reduction that might have propped up oil prices and eased the pressure on the region’s export revenues. Abu Dhabi equities dropped the most in a week.
Shares in the Middle East are catching up with last week’s losses across emerging markets after the Organization of Petroleum Exporting Countries kept production at about 31.5 million barrels a day, amid a glut in global oil supply.
“The market is going to continue to see some selling pressure this week” as OPEC’s decision will continue to damp sentiment, said Saleem Khokhar, who manages about $2.5 billion as head of equities at the asset management group of National Bank of Abu Dhabi PJSC, the U.A.E.’s biggest bank.
“The banking sector has been pretty aggressively sold, so we do see some real value there, although take on board it’s going to be a soft economy next year.”
The DFM General Index retreated 0.9 per cent to 3,174.34, led by Dubai Islamic Bank, the second-largest weight on the gauge, which declined the most since August. The ADX General Index fell 0.9 per cent. National Bank has fallen 37 per cent this year, more than five times the drop in Abu Dhabi’s gauge.
Brent crude, a pricing benchmark for half the world’s oil, dropped near a six-year low on Friday as the new output implied that the earliest OPEC can consider reducing production is June. The U.A.E., home to about 6 per cent of the world’s proven oil reserves, relies on income from crude to help fund government spending.
A Bloomberg gauge of 200 Gulf stocks has declined 11 per cent this year as oil’s slump continues and expectations of a Federal Reserve interest-rate increase next week spooks emerging markets.
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