Gulf markets mixed despite oil price plunge

Arabian Gulf stock markets were mixed within a narrow range in early trade on Tuesday as local retail investors continued to buy on dips, despite a fresh plunge of oil prices.

Brent crude dived more than 6 per cent on Monday to around $56 a barrel, pressured by the Greek debt crisis and volatility in China’s stock markets, before recovering to around $57 on Tuesday.

The latest slide is so steep it may call into question investors’ hopes for a gradual recovery of crude prices later this year, and raise the possibility of Gulf governments adopting additional spending restraints.

However, Gulf retail investors have to a large extent ignored oil prices in recent weeks, apparently convinced regional economies can grow solidly despite cheap crude.

The 25-day correlation between Brent crude and Dubai’s stock index has stayed below 0.3 for most of the time since the start of the June. The correlation with the Saudi stock index has been higher because of heavily weighted Saudi petrochemical shares, but it is still only just above 0.3.

Dubai’s stock index climbed 0.3 per cent on Tuesday morning, buoyed by heavy trade in Amlak Finance, which was up 3.0 per cent. The stock has been a favourite of local retail investors seeking short-term profits.

Abu Dhabi edged up 0.1 per cent on the back of telecommunications blue chip Etisalat, which gained 0.4 per cent.

Qatar slipped 0.3 per cent as Barwa Real Estate dropped 0.8 per cent.

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