Failure of Doha oil talks to weigh on Gulf bourses

 18 Apr 2016 - 8:55

Failure of Doha oil talks to weigh on Gulf bourses
Gulf stock markets, especially petrochemicals sector, may see huge impact due to the collapse of Sunday talks in Doha. Reuters 

Dubai: Stock markets in the Gulf look set to fall on Monday after oil prices tumbled in response to the collapse of Sunday's talks between oil producers in Doha.

Brent futures are trading at $41.27 per barrel, down 4.3 percent from their last settlement. The failure of the Doha meeting to agree on an oil output freeze may not make a huge difference to prices in the long term - analysts thought a freeze would have had only a minor impact on market conditions. But the talks' failure does deal a blow to sentiment in the oil market.

Asian shares have pulled back, with MSCI's broadest index of Asia-Pacific shares outside Japan 0.9 percent lower.

In Saudi Arabia, the main stock index fell 1.5 percent on Sunday as it became clear that the Doha talks were running into trouble, but their failure was announced well after the market closed.

The petrochemical sector may be hardest hit, especially after Saudi Arabia Fertilizers Co extended its earnings slump, reporting a 51.5 percent decline in net profit to 286 million riyals ($76.3 million).

Analysts had expected the unit of Saudi Basic Industries to make 314.6 million riyals. Shares in SAFCO are down 21.1 percent year-to-date. SABIC is expected to report its earnings early this week.

Another major commodity company, Saudi Arabian Mining Co (Ma'aden), reported a 35.3 percent fall in first-quarter net profit but still beat analysts' forecasts. The miner made a net profit of 168.9 million riyals compared with the average estimate of three analysts of just 1.13 million riyals.

Saudi banking sector earnings continue to come in above analysts' expectations with Arab National Bank, one of the last in the sector to report first-quarter results, posting net profit of 749.2 million riyals ($199.8 million), a 2.8 percent drop. Four analysts polled by Reuters had forecast on average the lender would make a first-quarter profit of 685.8 million riyals.