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Mideast stocks extend drop shrugging off new measure

Business | 2020-03-22 15:19:15
Mideast stocks extend drop shrugging off new measure
Equity markets in the Middle East extended losses Sunday despite regional governments trying to blunt the impact of coronavirus with economic stimulus measures.

Abu Dhabi’s main gauge lost the most in the region, while shares in Dubai, Saudi Arabia, Qatar and Bahrain also fell. The losses came after oil tumbled Friday on concern that the collapse of global energy demand will deepen.

Over the weekend, Dubai’s ruler, Sheikh Mohammad Bin Rashid Al-Maktoum, asked local banks to offer companies relief, including via repayment deferrals. Emirates NBD PJSC, Dubai’s biggest lender, lost as much as 4.9 percent as trading resumed. In Saudi Arabia, the government announced plans to raise its debt ceiling to borrow more as oil slumps.

“For banks, the pain will be felt for much longer. This is the perfect storm for them,” said Hedi Ben Mlouka, the chief executive officer at FIM Partners in Dubai, in an interview with Bloomberg TV Sunday. “The interest-rate environment has gone to zero, so net interest margins will depress further, especially for Saudi banks. And then, the deterioration of asset quality, higher non-performing loans, higher cost of risk, will probably lead to much lower dividend yields going forward.”

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