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Gulf stocks dive over global growth fears, oil prices

AFP, Sunday 12 Oct 2014
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Share prices in the energy-rich Gulf states nosedived on Sunday with investors spooked over global growth fears, declining oil prices and conflicts, analysts and traders said.

The decline was led by the Dubai Financial Market whose main index shed 6.54 percent to close at 4,619.60 points -- its lowest level in about three months.

The Saudi stock market, the largest in the Arab world, dived 6.44 percent during trading, to its lowest level in the year.

Abu Dhabi bourse dropped 3.5 percent, Qatar Exchange lost 3.0 percent while Kuwaiti shares closed down 1.0 percent.

"The markets are certainly impacted by the continued drop in the prices of oil which generates most of the income for the Gulf states," Ziad Chehab, vice president for research at Kuwait's KAMCO investments.

Since June, Brent crude has lost about $25 a barrel to fall below $90 a barrel, the lowest in four years.

"The geopolitical events and fighting in the region are weighing heavily on the Gulf stocks. The International Monetary Fund lowering of global growth forecast is also influencing regional shares markets negatively," Chehab told AFP.

The falls came after major stock markets around the world lost ground following the gloomy IMF forecasts.

The IMF on Tuesday trimmed its 2014 global growth forecast to 3.3 percent, down 0.1 percentage point from July, as it warned of stagnation in advanced economies and highlighted risks from the Russia-Ukraine crisis, strife in the Middle East and the Ebola epidemic.

The Fund lowered its growth forecasts for the Middle East and North Africa region to 2.6 percent from the 3.2 percent it projected in April mainly because of conflicts.

The IMF said the six states of the Gulf Cooperation Council, which pump 17 million barrels of oil daily, will grow at 4.5 percent in 2014-2015.

But it stressed the six would stop posting budget surpluses in 2017 because of the sharp drop in oil prices and high spending.

The GCC states posted huge budget surpluses for most of the past 15 years due to high oil prices. According to Sovereign Wealth Funds Institute, they have assets worth $2.45 trillion managed by their sovereign wealth funds.

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