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Oil drops below $28, region’s markets plummet

Oil hits a 12-year low as Asian equities hit a four-year low

Regional and international markets took a further dive on Wednesday after oil prices dipped lower than $28 a barrel, a 12-year low. Meanwhile, Asian equities hit a four-year low amid negative investor sentiment.

Markets have been declining for almost a week after the United States lifted the sanctions it had imposed on Iran last Saturday. Since the announcement, markets in the GCC have been in free fall.

UAE

Both Dubai’s and Abu Dhabi’s bourses dropped by more than three per cent on Wednesday, reaching 28-month lows, Reuters reported, as investors cashed out amid concerns about further drops in oil prices and overall negative sentiment.

Dubai’s index plunged 4.6 per cent with some of the most traded stocks on the bourse, like Drake & Scull, Arabtec and Emaar, also suffering from the plunge, according to the international news agency.

Meanwhile, Abu Dhabi’s bourse dropped 3.1 per cent, taking its 2016 losses to 12.5 per cent. The majority of stocks traded on the UAE capital’s market dropped more than four per cent, such Dana Gas, which suffered from a drop of 9.5 per cent.

“The stock markets are fickle and vulnerable to sways in the oil,” an Abu Dhabi-based trader told Reuters.

Saudi Arabia

The Saudi stock index dropped more than four per cent in early trade, with investors aggressively selling, again in light of low oil prices and concern over global equity.

In a roundup of the top-traded stock on the Saudi bourse, Petrochemical blue chip Saudi Basic Industries slumped 4.2 percent, Al Tayyar tumbled seven percent and stocks from other industries, such as banks, were also pressured.

Egypt

Egypt’s index slumped 3.2 per cent, especially responding to the declines in Asian markets. Orascom Telecom fell 6.9 percent, while investment firm Qalaa Holdings traded down three percent.

Stock exchanges in other GCC countries like Kuwait, Qatar, Bahrain and Oman also felt the repercussions.

This further crash comes one day after the market took a breather on Tuesday with a slight rebound, which clearly didn’t last for long.

“Tuesday’s rebound lost its bounce because we are back to the same macroeconomic worries, which have plagued equity markets from the start of the year,” the trader added.

Oil prices have been plummeting for nearly two years, but had especially suffered because of top OPEC members focusing on market share instead of supporting prices.