Gulf stock market is shaken anew as crude oil price continues its freefall by hitting a new five year low on Tuesday amidst low demand worldwide and concerns about political instability in Greece.
Brent crude oil hovers just above $57 per barrel for the first time in five years. With the Gulf’s largest economies heavily reliant on oil revenue, it is understandable that the region’s market will feel the brunt of the fall. The effect on stocks is immediately felt as Dubai’s Index tumbles 3.9 percent with the day’s most active stocks, Builder Arabtec Holding and developer Emaar Properties, both lost 5.3 percent of their values.
The shockwave quickly spreads around the region with Qatar’s bourse losing 2 percent, both Kuwait and Oman suffering 1 percent downfall, and Aby Dhabi’s index shedding half a point.
Though slumping oil price is mainly to blame for Tuesday’s slumping oil price and the resulting fall of stock prices, investors and traders are also weary of the political unstable political situation in Greece where a national election is scheduled for Jan. 15 after Prime Minister Antonio Samaras cannot muster enough votes for his presidential nominee.
Worry about possible state spending cuts in the region was quickly dispelled after Saudi Arabia announced last week that it will continue spending heavily on projects as stated in its 2015 budget plan even after the projected massive loss of revenue from oil. With the state spending on projects, investors expect profit to flow continuously and the steady growth of the economy.