Oman’s index took the biggest loss among markets in the world’s top oil-exporting region, falling 5.72 percent to a near six-month low of 9,536.73 points, pushing it into bear market territory, defined as a 20 percent fall from the peak of the cycle.
The index has dropped almost 13 percent in the last five trading days as blue chips including Oman Telecommunications Co (Omantel) plunged more than 18 percent.
“There is a shifting of funds from the Gulf towards markets that have attractive valuations, predominately in the United States,” said John Sfakianakis, chief economist at SABB bank, HSBC’s Saudi affiliate.
“Investors are booking profits because Gulf markets had continued to go up this year and the US is looking very good now. Investors are selling their positions,” he said.
Omantel, for instance, had rallied more than 40 percent in the first seven months of the year as foreign investors drove gains on Oman’s index, which was the region’s biggest gainer this year before a sell-off this month.
Dubai’s measure slid into bear territory, hitting its lowest close in almost 10 months while Abu Dhabi’s index ended at its lowest level since January. Qatar’s main index fell for a fifth day to a near four-month trough.
All Gulf states except Kuwait peg their currencies to the dollar, which hit a six-month high against a basket of major currencies on Monday. The euro suffered its biggest one-day drop since January 2001 on Friday.
Global investors had piled into Gulf stocks and property this year on expectations that the oil producers might sever their currency pegs or revalue as they battle inflation.
Expectations of a shift in currency policy have receded since April and the dollar’s broad global gains provided a good opportunity to sell shares that had rallied earlier this year, analysts said. “People have seen the dollar’s appreciation as an opportunity to liquidate positions which were built when the dollar was at lower levels,” said Mohamed Abu-Ghosh, an analyst at Qatar’s Ahli Bank.
Investor sentiment in the region has also been hit by news that Britain, France, Germany and the United States were considering imposing sanctions on Iran over its nuclear programme, traders and analysts said.
Real estate shares were big decliners across the Gulf, with Emaar Properties, the largest Arab developer by market value, falling 1.49 percent to 9.9 dirhams ($ 2.70), its lowest close in almost a year.
Emaar hit a session low of Dh9.77. First Gulf Bank in Abu Dhabi has fallen 30 percent since July 2. The stock, which plunged 9.46 percent yesterday, had rallied almost 50 percent in the first seven months of 2008.
“Investors are panicking,” said Jaysh Shah, head of brokerage at Bank Muscat. “We are coming to see better valuations and this fall should be seen with the perspective of the rise in the first half of the year.”
