Gulf stock markets extended losses in early trade Thursday with banks leading Saudi Arabia down, as investors continued to pull out of equities over concerns about the region’s economic slowdown and policies of austerity.
The Saudi index, which on Wednesday fell below minor technical support on the April low of 6,066 points, sank a further 1.4 percent on Thursday morning to 5,946 points.
The banking index dropped 1.7 percent with Al Rajhi Bank SE> sliding 2.3 percent. Investors are worried about the impact of a severe slump in the Saudi construction sector on the quality of bank loans.
Petrochemical shares were lower but outpaced the market.
Dubai’s index fell 0.5 percent. Emirates NBD lost 0.6 percent and Dubai Islamic Bank dropped 0.7 percent. Sources told Reuters on Wednesday that Emirates Islamic, the sharia-compliant arm of ENBD, had laid off more than 100 people as part of cost-cutting to adjust to a cooler economy.
Abu Dhabi’s index fell only 0.2 percent as bank of Sharjah jumped 4.8 percent in thin trade.
In Qatar, the index dropped 0.7 percent with oil drilling rig provider Gulf International Services sinking 1.5 percent. Eight of the 10 most heavily traded stocks declined.
Qatar’s gross domestic product, adjusted for inflation, grew only 1.1 percent from a year earlier in the first quarter, the slowest growth since at least 2011, data published on Thursday showed. Both the oil and gas sector and the rest of the economy shrank from the previous quarter.