GCC equities and coronavirus: Minimal impact in the UAE, Saudi stocks suffer losses

Oil prices dropped 11.9% on concerns over oil demand from China

An investor uses his mobile phone at the Dubai Financial Market.

An investor uses his mobile phone at the Dubai Financial Market.

REUTERS/Mosab Omar

Stocks in the Gulf Cooperation Council (GCC) tracked global equity markets lower in January, as gloom over the outbreak of the coronavirus in China weighed on investor sentiment around the world, Kuwait Financial Centre “Markaz” said in a report.

The S&P GCC composite index fell by 0.9 percent for the month with losses on the Saudi market offsetting gains in other markets, the report noted. Saudi stocks weigh 55.9 percent out of the S&P GCC index.

Global equity markets also fell with the MSCI World Index retreating 0.7 percent for the month despite a phase one trade deal between US-China, an increase in non-farm payrolls and good corporate earnings, the report said.

Commenting on the outbreak of the Coronavirus in China, Vijay Valecha, Chief Investment Officer, at Century Financial told Zawya: “Global economy is bound to suffer as China now accounts for 17% of the world’ s economic output and the impact on the economy is forecasted at $160 billion.” The impact of the virus was minimal on UAE stock markets. However, Saudi stocks suffered losses mostly due to falling oil prices, he said.

Oil prices plunged 11.9 percent in January as the coronavirus outbreak raised concerns over oil demand from China, the second largest importer of oil in the world.

Tadawul saw the largest losses, dropping 1.7 percent, with Saudi Aramco’s shares retreating 3.1 percent.

Bahrain’s index was the top performer in January, adding 2.9 percent, while the Omani index gained 2.5 percent and Abu Dhabi’s index rose 1.6 percent.

Dubai’s index rose 0.9 percent, while the Kuwaiti index gained 0.7 percent and Qatar’s index edged 0.2 percent higher.

Volatility in oil prices and uncertainties in global markets led investors to move towards gold, seen as a safe haven, with the metal’s prices increasing 4.8 percent during the period, the report said.

According to Valecha, certain sectors have benefitted from the crisis.

“The outbreak of the virus has certainly impacted the sectors like aviation, cruises, energy, leisure, hotel industry, luxury goods, however it is also turning out to be positive for certain sectors such as pharmaceuticals, health care, and certain e-commerce stocks,” he said.

(Writing by Gerard Aoun; editing by Seban Scaria)

( gerard.aoun@refinitiv.com )

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© ZAWYA 2020

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