x Abu Dhabi, UAETuesday 23 January 2018

Gulf stock markets fall in wake of protests

Bahrain's financial district was partially open as demonstrations continued for the eighth consecutive day.

Protesters at the Pearl Roundabout in Manama, Bahrain. Amy Leang / The National
Protesters at the Pearl Roundabout in Manama, Bahrain. Amy Leang / The National

Bahrain's financial district was partly closed yesterday as protests continued across Manama.

The Pearl Roundabout, the site of Bahrain's demonstrations in the past week, borders the financial district, making it hard for some employees to get to their offices.

"Nobody has been advised to stay at home but quite a few companies have taken a decision to shut down, just to be on the safe side," said Rohan Shanker, a public relations executive at Action Bahrain. "There's no way you can avoid Pearl Roundabout."

Mr Shanker has worked from home since Thursday when the protests escalated and blocked the flow of traffic into the district.

"It's not business as normal. Many people aren't showing up to work," said Jasim Husain, a member of Bahrain's opposition al Wefaq bloc who sits on the economics and finance committee.

Citibank, meanwhile, rented space at nearby hotels for its most important workers to ensure they could continue to work, said Heba al Shehabi, an employee at Citibank Bahrain.

All Gulf bourses posted losses yesterday, with Dubai and Kuwait shedding the most.

"There's a political risk premium being made for the whole region," said Haissam Arabi, the chief executive of the fund and asset manager Gulfmena Alternative Investments in Dubai. "So long as we continue to see the political turmoil escalating or spreading further, it will place more pressure on the equity markets."

Bahrain's bourse was open for trading yesterday, closing down 0.2 per cent, but only five stocks were traded as most investors stayed away from the exchange.

The country's credit default swaps, or the cost of insuring against sovereign default, surged almost 30 per cent last week.

Fitch Ratings decided to put the country's foreign currency rating on watch, which means a downgrade is possible in three to six months.

The Central Bank of Bahrain, meanwhile, said operations at all retail banks were normal yesterday. "All financial transactions are at the normal level and the dinar continues to trade at the same level," the central bank told Bloomberg News.

Kuwait's measure declined 2.5 per cent to 6,394.20 after reports that riot police used tear gas on protesters over the weekend.

"It will be difficult to assess the risk and effect on the Bahrain and Kuwait economies," said Tariq Qaqish, the director and fund manager at Al Mal Capital in Dubai.

"Kuwait has the financial strength … so they have the cash to sustain spending even during a turmoil. Bahrain is a different story because they have a weaker economy."

The Dubai Financial Market General Index lost 3.6 per cent to 6,395.69 as investors sold out of stocks that have footprints across the wider region.

Aramex, the largest courier company in the Middle East, lost 8.1 per cent to Dh1.70. Emaar Properties, among the Middle East's largest developers, lost almost 5 per cent to Dh3.02.

The Abu Dhabi Securities Exchange General Index declined 1.9 per cent to 2,632.69.

Analysts said investors would be closely monitoring protests.

Qatar's measure declined 1.6 per cent yesterday to 8,563.84. The Saudi Tadawul All-Share Index fell 0.7 per cent to 6,333.91, after declining 3 per cent on Saturday.