GCC bourses close in the red as US-Iran tensions escalate

Most Gulf markets are reacting negatively due to the ongoing geopolitical tensions and the situation may continue for some time. (Reuters)
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Updated 06 January 2020

GCC bourses close in the red as US-Iran tensions escalate

  • Egypt’s blue-chip index also hard hit as all its shares ended lower

DUBAI: Gulf bourses saw steep declines on Sunday, with Kuwait falling the most following tensions between the US and Iran, while outside the Gulf Egypt was also hard hit as all its shares ended lower.

Iranian military commander Qassem Soleimani was killed on Friday in a US drone strike on his convoy at the Baghdad airport, seen by Tehran as an act of war that risks regional conflagration.

“Not surprising, the Gulf markets are reacting negatively given we are in the middle of all the geopolitics action,” said Vrajesh Bhandari, a senior portfolio manager at Al Mal Capital.

“We fear this can be an overhang over the next few months and not just a one day or week thing.”

Saudi Arabia’s benchmark index lost 2.4 percent, weighed down by a 2.1 percent drop in Al-Rajhi Bank and a 1.7 percent fall in Saudi Aramco to SR34.6 ($9.2), which hit its lowest intraday level since last month’s market debut.

Egypt’s blue-chip index dived 4.4 percent, touching its lowest since September 2019. The country’s largest lender Commercial International Bank closed down 1.9 percent and Eastern Company dived 4.9 percent.

In Kuwait, the index plunged 4.1 percent with all stocks in the red including Kuwait Finance House, down 5.1 percent, and National Bank of Kuwait, off 2.8 percent.

The Dubai index tumbled 3.1 percent, hurt by a 3.1 percent slide in its largest lender Emirates NBD and a 3.7 percent decline in Emaar Properties.

Abu Dhabi’s index lost 1.4 percent, with the UAE’s largest lender First Abu Dhabi Bank retreating 1.2 percent, while Abu Dhabi Commercial Bank was down 3.3 percent.

HIGHLIGHTS

• Saudi Arabia’s benchmark index lost 2.4 percent.

• The Dubai index tumbled 3.1 percent.

• Abu Dhabi’s index lost 1.4 percent.

• The small bourse of Oman dropped by just 0.3 percent.

The decline in Gulf shares comes despite a surge in oil prices, on which all six GCC nations rely heavily for public revenues.

“It’s certainly due to fears of a possible US-Iranian conflict breaking out in the Gulf,” said Mohammed Zidan, market strategist at Thinkmarket in Dubai.

“I think the decline will continue for some time and especially as long as tensions and the threat of an armed conflict continue,” Zidan told AFP.

The Qatar index eased 2.1 percent with all its 20 stocks closing lower. Lender Masraf Al Rayan fell 2.7 percent and Qatar National Bank declined 1.4 percent.

The normally dormant bourse of Bahrain, home to the US 5th fleet, fell 2.3 percent.

The small bourse of Oman dropped by just 0.3 percent.


Bailout will keep Air France-KLM afloat for less than year: CEO

Updated 21 September 2020

Bailout will keep Air France-KLM afloat for less than year: CEO

  • ‘If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected’
  • Governments are coming under pressure to tie airline bailouts to environmental commitments

PARIS: Bailouts provided to Air France-KLM by the French and Dutch governments will keep the airline flying less than a year, its CEO Benjamin Smith said Monday and evoked the possibility of injecting new capital.
In an interview with the French daily l’Opinion, Smith also warned that calls for airlines to contribute more to fight climate change could be catastrophic for their survival which is already under threat due to the coronavirus pandemic.
When countries imposed lockdowns earlier this year to stem the spread of the coronavirus airlines faced steep drops in revenue that have claimed several carriers.
A number of countries stepped in with support, including France which provided $8.2 billion to Air France and the Netherlands which received a $2.9 billion package.
“This support will permit us to hold on less than 12 months,” said Smith.
The reason is that air traffic is picking up very slowly as many northern hemisphere countries are now fearing a second wave of infections.
“If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected,” according to Smith, who said when the bailout was put together the airline was expecting a return to 2019 levels only in 2024.
Smith said discussions were already underway with shareholders on shoring up the airline group, and steps would be taken before the next regular annual meeting in the second quarter of next year.
“One, three or five billion euros? It is too early to put a figure on a possible recapitalization,” he said.
The airline group had $12.12 billion in cash or available under credit lines.
Major shareholders include the French government with a 14.3 percent stake, the Dutch government at 14 percent, as well as Delta and China Eastern airlines which each hold an 8 percent stake.
Governments are coming under pressure to tie airline bailouts to environmental commitments.
One proposal that has come from a citizen’s convention convoked by President Emmanuel Macron would cost airlines an estimated $3.6 billion.
Smith said the imposition of environmental charges on the industry would be “irresponsible and catastrophic” for Air France-KLM.