Gulf shares fall on recession concerns, oil price slump and lack of financing

Dubai: Gulf shares declined on Tuesday, led by Saudi Basic Industries Corp and banks as concern heightened that the deepening global recession will drive down commodity prices and weaken demand for Arabian Gulf exports.

Saudi Basic Industries, the largest company in the Middle East by market value, fell for the first time in four days. Industries Qatar, the region's second-largest chemical maker, slipped for the second day. Al Rajhi Bank, the largest lender in Saudi Arabia, ended a three-day gain, while the National Bank of Kuwait fell for a second day.

The Tadawul All Share Index sank to it lowest level in four days, declining 3.9 per cent to 4,607.08 as of noon local time. Qatar's DSM 20 Index declined 2.8 per cent, while the Kuwait Stock Exchange Index slipped 1.4 per cent.

"Oil has a psychological effect," John Sfakianakis, chief economist at Saudi British Bank in Riyadh, said in a telephone interview yesterday. "The momentum in the Saudi market is downward on the back of low oil prices, which could continue to go down."

The Gulf region is bracing for a slowdown in their economies as oil prices drop and financing for real estate projects dries up amid the worst global fin-ancial crisis since the Great Depression.

In the UAE, where exchanges are closed from yesterday until December 10 for the holidays, Nakheel, the Dubai-owned developer of the three palm islands, and other property developers have already reduced their workforces as they scale back projects. Crude oil fell to the lowest in more than three years in New York on signs that the economy in the US, the world's largest energy consumer, is in a more severe economic slowdown than expected.

Crude oil for January delivery dropped as much as $1.92 (Dh7.05), or 3.9 per cent, to $47.36 a barrel in after-hours trading on Monday on the New York Mercantile Exchange.