Coronavirus: UAE stock markets plunge, lose billions of dirhams

The UAE and other Gulf stock markets witnessed massive sell-off billion with billions of dirhams wiped out in the first hour of trading on Sunday after Opec+ failed to reach a deal on production cut while new cases of coronavirus were also reported in the region.
Dubai Financial Market General Index plunged 8.37 per cent while Abu Dhabi Securities Market fell by 6.8 per cent in the first hour of trading. All the shares on the UAE bourses were in the red in the early hours of trading.
Among other regional bourses, Saudi Arabia's Tadawul plunged 6.1 per cent, Boursa Kuwait fell over 7 per cent, Qatar Stock Exchange lost 3.8 per cent, Oman's Muscat Securities Market dropped 0.46 per cent and Bahrain Bourse was down 0.10 per cent within an hour of opening the trade.
Investors went into panic mode after oil producer group Opec's pact with Russia fell apart, sending oil prices into tailspin on Friday. Oil prices plunged 10 per cent on Friday after Opec and other oil producers meeting collapsed in Vienna. Russia reportedly disagreed on deeper oil cuts while Opec responded by removing all limits on its own production. As a result, WTI crude fell 10 per cent or $4.62 a barrel to $41.28 while Brent lost 9.44 per cent or $4.72 to $45.27 on Friday. The price of Brent crude dropped from around $70pb in early January.
Saudi Arabia also slashed its official selling price (OSP) for April for all its crude grades to all destinations after oil supply cut pact with Russia fell apart.
State oil giant Saudi Aramco has set its Arab light crude oil to Asia for April at a discount of $3.10 to the Oman/Dubai average, down $6 a barrel from March, the company said in a statement late on Saturday, March 7.
As a result of collapse in Opec+ talks, investors fear that this will lead to big decline in oil prices, which have already declined substantially year-to-date due to coronavirus impact.
In addition, the new coronavirus cases were also reported in the GCC over the weekend while new travel advisories were issued by the UAE and other regional countries in order to contain the impact of Covid-19.
Last week, equity markets in the GCC recorded a negative performance, with all the 8 indexes closing in red during the week.
Going forward, volatility might continue to remain at elevated levels as the heightened anxiety might persist due to the rapid spread of the epidemic globally, coupled with its unpredictable impact on global economies.
"The regional markets will continue to follow the trend in global markets but the sharp decline in oil prices is becoming a bigger concern for regional investors amid adverse global headlines," said Iyad Abu Hweij, managing director of Allied Investment Partners.
waheedabbas@khaleejtimes.com