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Arab Stocks Sink Most in World as Rising Political Tension Bites

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  • Arab Stocks Sink Most in World as Rising Political Tension Bites

Stock indexes across the Gulf were among the world’s worst performers after a crackdown in Saudi Arabia and heightened geopolitical tension rattled investors.

Kuwait’s SE Price Index retreated 2.8 percent as 99 members declined, more than any day since May. Saudi Arabia’s Tadawul All Share Index lost as much as 3.1 percent, the most in a year, before trimming losses to close 0.7 percent lower. About 25 companies on the gauge fell around 10 percent, the maximum allowed in a day. Trading on Saudi Arabia’s index exceeded 200 million for the first time since June.

  • DFM General Index dropped 1.8 percent
  • Qatar’s QE Index fell 1.1 percent
  • Bahrain Bourse All Share Index retreated 1 percent
  • Egypt’s EGX 30 Index declined 0.1 percent
  • Abu Dhabi’s ADX General Index retreats 0.4 percent

Saudi Arabia arrested dozens of princes, ministers and former and current officials as part of fight against corruption. It also renewed a confrontation with rival Iran after Lebanese Prime Minister Saad al-Hariri resigned on Saturday from Saudi Arabia, blaming Iran and Hezbollah.

“Investors have been hammered with bad news on the geopolitical front,” said Nabil Al Rantisi, the managing director of Abu Dhabi-based Mena Corp. Financial Services. “It’s not easy to see what is coming next. Some individuals and institutions are trying to dump assets that are tied to the investigations, there is selling pressure. Some others are seeing it as an opportunity to buy.”

The declines have helped lower the 14-day relative strength index of Dubai’s benchmark gauge below 30 for the first time since May, a sign to some analysts the measure may have fallen too far, too fast.

Biggest Losers

Prince Alwaleed bin Talal, a billionaire with investments in companies including Citigroup Inc. and Apple Inc., was among those arrested. The company he founded, Kingdom Holding Co. fell 10 percent on Tuesday, bringing the three-day slump to 21 percent. Red Sea International Co., Al Tayyar Travel Group and Aseer Trading Tourism & Manufacturing Co. also declined about 10 percent after reports that some of their executives were also drawn into the corruption probe.

The Tadawul recovered much of its losses toward the end of the trading day, similar to both Sunday and Monday, when it erased losses of as much as 2.2 percent.

“I think the government funds, led by the Public Investment Fund, are supporting the market,” said Joice Mathew, the head of equity research at United Securities in Muscat. “Look at other markets, all are down by more than a couple of percentage points in the last three days, while Saudi is the only market which is still holding up.”

“The government needs to show that financial markets are taking the move positively and business is as usual in Saudi, while the reality is something else,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Brent Crude Oil Approaches $70 Per Barrel on Friday

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Crude oil

Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension

Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.

Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.

Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.

While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.

According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.

“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”

Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.

The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.

I do believe we’re headed for a much healthier supply and demand environment” she said.

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Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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