Dubai: stocks sink as panic selling spreads across Gulf

Dubai's stock index tumbled on Thursday, heading for its biggest daily drop in five years, after Brent crude oil dropped to a fresh five-year low.

The emirate's main index sank 7.2 percent to 3,604 points, falling below major technical support at 3,731 points, its July trough.

Other Gulf markets were also bleeding. The main index in Abu Dhabi dropped 3.7 percent, Qatar was down 3.5 percent, Oman fell 2.8 percent and Kuwait slid 1.6 percent.

Saudi Arabia's index fell 2.7 percent in the opening minutes of trade.

"What we see is panic selling - people sell whatever they can irrespective of valuations," said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.

"I don't see any reason for this to stop unless oil price uncertainty is removed."

The price of Brent tumbled on Wednesday to $63.56 per barrel on comments by Saudi Arabia's oil minister again implying that Riyadh would make no output cut. It ticked up early on Thursday but still traded below $65.

Economists do not expect growth in the big Gulf economies to be seriously hit if oil stays at current levels, because governments have huge fiscal reserves which they can use to maintain spending even if they run budget deficits.

But oil's quick drop is having a psychological impact on retail investors who dominate trading in the Gulf markets and who want to lock in profits after big gains in the past 18 months. In Dubai in particular, selling may be magnified by margin calls and investors raising money to repay bank loans which they took out to buy stocks on the way up.