Mideast stocks plunged on Sunday, as concerns about the coronavirus and tumbling crude prices weighed heavily on fragile sentiment in region, where governments have imposed a variety of travel restrictions in an effort to keep local occurrences of the disease to a minimum in the face of Iran’s burgeoning health crisis.
Saudi Aramco sank to a new post-IPO low, in what looks like the third-worst session since the world’s most profitable company went public in December.
More broadly, Saudi shares are in a correction.
Panic over demand destruction in commodities drove crude to its worst week since the crisis. WTI futures fell a truly astounding 16% in five days.
OPEC+ will meet next week, but a production cut (assuming the Russians can be swayed) likely won’t be enough to put a floor under prices if news of quarantines and travel restrictions continues unabated.
The bottom line (for right now, anyway) is that estimating the demand hit from the virus is an exercise in futility. China’s oil demand plunged recently by around 3 million barrels/day, amounting to 20% of total consumption.
Meanwhile, it’s not clear OPEC is being totally realistic about the likely hit. For example, the IEA’s revision to first quarter oil demand estimates from January to February was dramatic. OPEC’s, not so much:
Riyadh said Sunday that the Saudi economy expanded just 0.3% in 2019, a mile below the official forecast of 0.9%. The oil sector contracted by 3.6%. It was the Saudi economy’s worst showing since 2017.
Kuwait’s stock market – which reopened Sunday after a three-day holiday – had to be suspended after shares careened nearly 11% lower. National Bank of Kuwait and Kuwait Finance House each dropped 10%.
(BBG)
Shares in Dubai plunged 4.5%. It was the sixth consecutive day of losses for the DFM General Index.
Dubai shares are now down in excess of 13% since the virus fears escalated in late January.
The main gauge now sits at its lowest levels since December of 2018, when global equities were melting down in the face of an egregious selloff on Wall Street and a similarly harrowing decline in crude prices.
The latest COVID-19 update from Iran found the country reporting more than 500 new cases. Egypt and Qatar now have infections, and the UAE said it would close school nurseries.
For context, today’s losses across regional benchmarks come on top of last week’s near $80 billion wipeout.
Nothing further.
