Kuwait Stocks Drop With Emir in Hospital, S&P Outlook: Inside EM

(Bloomberg) --

Kuwait’s main equity index led losses in the Gulf after the country’s ruler was hospitalized over the weekend and S&P Global Ratings downgraded the prospects for the economy.

The Premier Market index of the biggest and most liquid shares in Kuwait ended 1.2% lower, with National Bank of Kuwait SAKP leading the decline.

The 91-year-old emir, Sheikh Sabah Al-Ahmed Al-Sabah, underwent “successful surgery” on Sunday after being admitted to a hospital, the state news agency KUNA reported. Crown Prince Sheikh Nawaf Al-Ahmed Al-Sabah will temporarily assume some of the emir’s constitutional functions and duties as the country tries to resume economic activity after introducing curbs to prevent the spread of the coronavirus.

In addition, S&P lowered its outlook for the country’s sovereign rating to negative from stable, citing the impact of oil-production cuts amid the pandemic. The ratings company expects the government deficit to widen to almost 40% of gross domestic product this year compared with about 10% in 2019.

The change in outlook “is an automatic result of low liquidity in state reserves,” Finance Minister Barak Al-Sheetan said in a statement. “The executive and legislative powers are now working on finding solutions for this challenge.”

MIDDLE EASTERN MARKETS:

• Egypt’s EGX 30 closes 1.5% lower, the fifth consecutive session of decline, amid concerns of escalating tensions in neighboring Libya
  • NOTE: President Abdel-Fattah El-Sisi said his country’s military was capable of turning the tide of the conflict in Libya if pro-government forces sought to seize a key city controlled by an ally of Cairo
  • “Today’s weakness is because of the developments centered round Libya,” said Allen Sandeep, director of research at Cairo-based Naeem Holding. “Markets are expected to remain in choppy territory until the situation in Libya becomes clearer in the days and weeks ahead”
• S&P’s decision on Kuwait’s outlook adds to “prevailing negative sentiments,” said M.R. Raghu, the head of research at Kuwait Financial Centre SAK
  • “With many companies yet to release earnings numbers for the April-June period, the strength of economic recovery would be assessed”
• Saudi Arabia’s Tadawul All Share Index little changed, with Aramco leading decline
  • READ: Saudi Arabia Will Extend SME Loan Deferral Program if Needed
• Gauges in Qatar, Muscat and Dubai rise as much as 0.4%, while those in Abu Dhabi and Bahrain decline as much as 0.9%

  • Credit Suisse sees “some difficulties still ahead for real estate overall” in Dubai, the Head of Middle East Research Fahd Iqbal says in an interview to Bloomberg TV

    • “As far as a sustained recovery is concerned, we really need to see a stabilization in actual population numbers,” as well as “any kind of stabilization we see in the overall sales”
• Israel’s TA-35 falls 0.1% at 4 p.m. local time
  • The government approved new restrictions that will shutter non-essential businesses on weekends to slow a surge of Covid-19 cases
  • READ: Bank of Israel Chief Expects Contraction Worse Than 6% This Year
• MORE on Kuwait, from July 6: Kuwait’s Savings for Life After Oil May Be Needed a Lot Sooner

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