Gulf Markets Melting Down: Saudi Arabia Plunges 7%, Dubai Sold

Tyler Durden's picture

Following the end of a horrible week for petroleum importers (not to mention shale producers) despite WTI briefly dipping under $40 (wasn't this supposed to be great news for the US economy?) we have the start of a just as ugly week for the Persian Gulf oil exporters, whose Sunday market open can be described as a continuation of last week's broad risk carnage, and where Saudi Arabia, until recently the region's best performing market, is now down 10% for the year and down 30% compared to 12 months ago.

Appropriately enough following our overnight article lamenting the death of the Petrodollar, the WSJ opens with a description of "stock markets in the petrodollar-dependent Persian Gulf tumbled Sunday to multi-month lows, spooked by sharply lower oil prices and a global equities selloff on growing concerns about China’s economy."

Some examples:

Saudi Arabia, the Middle East’s biggest market, led the regionwide decline to finish the day nearly 7% lower. Dubai stocks dropped by a similar percentage, while regional peers Abu Dhabi and Doha’s markets both fell 5% each to extend recent losses.

 

Dubai stocks lost 7% to end at 3451.48, while its neighbor in the United Arab Emirates, Abu Dhabi’s market, dropped 5% to 4286.49. Qatar’s main stocks benchmark finished down 5.3% at 10,750. The Gulf stock markets are open for trading Sunday through Thursday.

 

Investors took a lead from Saudi Arabia, the region’s biggest economy. Its stocks closed 6.9% lower at 7463.32 after Fitch Ratings on Friday downgraded its outlook for the kingdom to negative from stable because of weaker oil prices.

 

The Saudi economy is heavily dependent on oil, which accounts for 90% of fiscal revenues, 80% of current account revenues and 40% of the gross domestic product, analysts at Fitch noted.

Visually:

By now, we have hammered the point that the price of oil impacts so much more than just the US "price at the pump" that even the most clueless hacks have admitted that plunging oil is not "unambiguously good" for the economy. In fact, it is downright bad for every economy whose confidence is reliant on asset prices, as the liquidation of oil forces the selling of other related assets to satisfy fiscal deficits and capital outflows (if anyone is still confused how this works, then read our article from last November which explained it all) in what a procyclical feedback loop, which was great when the cycle was on the way up and is anythig but now that the global commodity/asset/leverage cycle is finally deflating.

So what comes next? The margin calls, of course:

Not surprisingly, retail investors that still dominate most regional markets further cut their equity exposure, also in part because of margin calls as benchmarks fell below key support levels. Margin financing, or money borrowed for stock purchases, is often used by small investors in the region because of the relatively easy access to credit here.

“The multiple fears of China slowing down, a currency war, reduced oil-related income for regional governments to spend and a growing U.S. economy not being strong enough to withstand these new threats does not make for a pretty picture,” Al Masah Capital said

And just like in China and the US, investors need some reassurance, preferably from central banks and such, that the selling is now over.

“Regional buyers need a lot of conviction to step in front of this speeding train; however, valuations are becoming attractive, especially in Saudi and U.A.E., but these now need to be taken in context of a rapidly changing economic environment,” Al Masah added.

The WSJ concludes by noting that "several analysts agreed that the selling might be overdone, especially in some Gulf markets, but largely remain cautious." In other words, more cautiously optimistic "analysts" - just what CNBC needs ahead of its Sunday night Markets in Turmoil segment.

In the meantime we bring you... "Arab traders with hands on their heads (if not yet faces)"

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
SandiaMan's picture

Drop the gas prices!

VinceFostersGhost's picture

 

 

Can't.....we're heading into Labor Day.

Freddie's picture

How many innocent Syrians including Christian Syrians have the Gulf States murdered using ISIS, ISIL, NUSRA, Al Qeada?  You know McCain's selfie pals and also friends of Nudelman and Obola.

Oh regional Indian's picture

Tis the end of the age of OIL...and thus the dollah too..

And after being a long time sceptic of Cryptosurrencies, yes they are totally tracked and owned by USA shadow establishment (what is not these days), but they will get a lot of the attention that metal heads (me included, Ag will do very well still, so many uses in this shitty environment just for purification, medical uses, Industrial and on and on) are hoping will go to metals.

Look at Greece as a classic example...Bitcoin ATM's sprouting...

Stop by and follow along if called...I'm doing my bit for kicking Big oil....where it hertz!

https://www.youtube.com/watch?v=FjmWeypvoQg

Iam_Silverman's picture

"This isn't going to help the markets tonight if the NORKs are involved:"

 

I wonder if it would be in retaliation for a recent, mysterious explosion at a Chinese port? It would be pretty easy for the Chinese to set the Norks up as the fall guy though, wouldn't it?

techpreist's picture

This is exactly what AJ Spiker was saying a few years back when he was GOP chairman in Iowa. They couldn't kick him out fast enough; that party needs the Christian vote until they have the chance to liquidate them.

Jack Burton's picture

People like Nudelman do not mind seeing christians piled high in body piles! They use their media to paint themselves as the world's most important life forms. The media would never report what they really do! Never!

BaBaBouy's picture

Is iSIS Winning ??????????  

Apparently...

While The Chief is on The Golf...

roadhazard's picture

ISIS winning, apparently Not. They look stopped in their tracks and are barely holding on to what they have. You don't hear much anymore about cities taken. Actually they are having a hard time now getting funds. Having now to sell ancient art works that can be moved and only destroying those that can't. Oil sales being shut down and having to shake down the populace of those they control. Just another bunch of thugs sporting a web site of BS.

Reichstag Fire Dept.'s picture

ISIS is "winning" until the US Military tells them the show is over! They are allowing this ISIS bullshit for now because it serves their means...

Karlus's picture

Their low oil price strategy is working great. Hope Saudi soverign is short their market

Never One Roach's picture

Barry has Putin against the wall now I bet!

 

National Houston-based retailer to close 90 stores

 

http://www.bizjournals.com/houston/morning_call/2015/08/national-houston...

fattail's picture

I always like to see vacancies increase right before rates go up after 80 months of historic lows.  The giant farting sound you hear is CRE prices.  Starting to feel like epic deflation prices are right around the corner.  Finally.  

Equity values propped up by leveraged share buybacks should drop like a rock.  What is the effect on the S&P of all of the leveraged share buybacks the last few years? Seriously, is a 60% drop in the cards or something closer to 80%.  Or do they prop it up at 40%?

Reichstag Fire Dept.'s picture

Barry is up against a wall alright...the Great Wall! :D

Chuck Knoblauch's picture

CHINA CHINA CHINA

Why have oil prices collapsed?

CHINA/IRAN TRADE

Israelis don't want you to know that.

morons

KnuckleDragger-X's picture

Most people aren't even aware that Iran and China have made a deal......

KungFuMaster's picture

Wow, that pretty much hexplains everything. I knew Iran was selling oil to India for gold, though.

GMadScientist's picture

Yay China for playing the Sunnis and Shiites against each other economically instead of militarily.

IridiumRebel's picture

Seems their markets will mimic what oil has done over the last 6 months.

Peter Pan's picture

Something tells me that those Arabs better get start getting used to tents and no airconditioning once again.

cougar_w's picture

It's days like this when I like to trot out this little gem:

http://www.sustainablecitynews.com/dim_ages-html/

Not my work, BTW.

Oh and before you all start dusting off your schadenfreude for a Sunday drive remember than camels don't run on gasoline, your Escalade does. As does your entire modern food and materials supply chain.

Bank_sters's picture

They wear some fancy white dresses.  That should help cool em off.

Ajax_USB_Port_Repair_Service_'s picture

The Arabs are O.K.! If oil revenues fall, the Arabs can always fall back on their...well...no...I guess the Arabs are screwed.

Niall Of The Nine Hostages's picture

They can take a page out of Nauru's playbook when they ran out of guano. Good money to be made as a dumping ground for asylum seekers---or Greater Israel's Arabs.

ToSoft4Truth's picture

If it's curtains for the Gulf this means oil is a relic.

Go long TSLA?

Arnold's picture

Electricity will be the next unaffordable relic.

Truth in word and deed was the last one.

U4 eee aaa's picture

That's ok I already have enough stock in PT Barnum inc. I don't need two

cougar_w's picture

100% of the Tesla Motors supply chain comes from manufacturers in China and is dependent on cheap and available fossil fuels, and 40% of the electricity (in the US) used to charge it is generated by coal.

I consider myself "green" in the economic sense (not so much in the political sense) and I ride a bicycle and I built my own electric chopper, but I would never own a Tesla because it is wrong.

techpreist's picture

+1. I saw plenty of scientists trying to invent the next great battery, but until one of their inventions costs less than 10x its weight in gold and lasts much more than a month I will not be holding my breath on renewables.

This coming from a former renewables researcher.

cougar_w's picture

The "renewables" meme is another part of the ongoing corporate mind-fuck of America. They had "Saudi America!" when they wanted the rednecks to think tight-oil was going to make us net exporters again, driving around in our 2-ton Ford trucks on $1/gal diesel. And the same bunch of maggots had "we can run our BAU on renewables!" for the green-necks (I just made that up!) who wanted to drive around all smug in their hybrid SUV (which still runs on gas, what the fuck are they so smug about). The idea being to play each faction against each other but ultimately against their own inner terror at being deprived of something sacred, like driving their lame asses to spectator sporting rituals.

Well I guess those maggots are geniuses because the whole mind-fuck of America thing worked. Though in retrospect it was probably an easy sell. Everyone wanted to believe.

daveO's picture

What do those 2 classes of 'necks' have in common? A 6 year mortgage on their rolling shrine. Self righteous debt slaves. End the FED! 

GMadScientist's picture

Only appropriate since they'll soon be livin' in it.

explodinghead's picture

Doesn't quite meet those requirements but the Velkess battery looks promising.

cougar_w's picture

Something always looks promising. Like a carrot on a stick, out there always promising.

And that my fine friend is how you play this game of extend and pretend.

Bay of Pigs's picture

Aside from Bahrain, all those indexes are now in a bear market.

I wonder if the BlowHorn will even mention that.

greatbeard's picture

What the fuck do you expect in a stock market where all the guys wear long dresses?  Silly looking shit.  Put some pants on you camel fuckers.

Never One Roach's picture

BTW, I've read camel meat tastes alot like chicken if you prepare it right. Soon, camel jerky may be one of thier only profitable exports.

cougar_w's picture

SA will be exporting high-quality crude for another 50 years -- if not 100 years -- but beyond a certain point nobody reading this will see a single drop of it.

The question was never about getting at the oil. Every barrel of oil over there is going to come out of the ground. But once the US tight-oil play is dead the SA oil is going to sell at $500/bbl to rich fuckers who don't question the price -- like oh for example everyone owns a private jet or is willing to pay $15000 a seat to fly NY-to-LA --  and all us low-life pukes think we are entitled to our Sacred American Way of Life (meaning driving our obese asses to the WalMart for cigs and cheese nibbles twice a day) can go live under a bridge and weep continuously about how great it used to be.

Most of you people totally have your heads up yours asses. You know that, right?

cougar_w's picture

And before one of you Bright Boys jumps in and says, But cougar at $500 per tight-oil is economical again! -- yeah it is but you won't see a drop of that either. No that US oil goes straight to the MIC and out onto the battlefield, because at $500 per the US corporate State will be fighting tooth and nail in every oil patch to get Haliburton in there drilling baby drilling. You want to drive around like in the good 'ol days then you can drive a tank mutherfucker.

Nick Jihad's picture

At higher prices, it becomes economic to synthesize liquid fuels from coal. A cleaner alternative would be to use nuclear energy, but either way, there are alternatives that set a cap on the market price of petroleum products.

cougar_w's picture

Thanks for playing along.

Edit: Guys guys why all the down votes? Can't you tell he was being sarcastic? I set it up, he knocked it in. We're like a comedy act see?

cougar_w's picture

Probably at negative EROEI. If it burns in the turbine of an Abrams MBT they'll probably do it anyway, war being all about short term negative returns. But I don't see how that does any good for the average American motorist.

Niall Of The Nine Hostages's picture

Bull. They'll be a net importer in 15 years, max.