Middle East Markets Hit Hard but Stabilized on Sunday after Brexit Vote

by John Galt
June 26, 2016 11:00 ET

The running theme in equity markets around the world has been to panic, sell, and pray for some sort of government intervention. In the Middle East that is no different except the intervention must come from the monarchies not from central banksters and indeed that is what happened throughout the Gulf Cooperation Council (GCC) nations today.

The interesting pattern in all the charts is massive selling on the open and some recovery towards the close however in those nations where the royal families intervened to bolster markets, the pattern is obvious.

One story from the region via Arabian Business points to the problems Brexit is causing Arab investors:

Brexit ‘wipes out Gulf real estate gains in London’

Excerpt:

Middle Eastern investors eyeing London residential property would benefit from a significant drop in sales prices following Britain’s vote to exit the European Union (EU) whereas existing investors stand to lose out, it has been claimed.

The sharp drop in sterling over the weekend will have “erased” any gains made by property buyers in the capital in recent years, particular those from the Gulf whose currencies are pegged to the US dollar, according to real estate consultancy Cluttons.

However, for prospective investors operating in the US dollar or UAE dirham, the price of an average prime central London residential asset is now $96,000 (AED 350,000) less than it was on June 20, the company claimed.

Interestingly enough, if oil prices crash back below $35 per bbl. due to a global economic slowdown in the aftermath of Brexit, the article does not indicate how Arab investors will have the money to invest in London or any foreign real estate market as large quantities of their nation’s foreign reserves are being used to pacify the local populations and support regional economies to prevent all out revolution in the region.

Here are the market closes in the region today, charts courtesy of Investing.com:

062616_BAHRAIN_ALLSHARE_jgfla

Note the pattern as mentioned at the start of this article in these first charts.

062616_KUWAIT_SE_jgfla

Same pattern continues throughout the region:

062616_QATAR_SE_jgfla

Qatar was an obvious case and nation to engage in market manipulation.

062616_ABUDHABI_ADX_jgfla

As was Abu Dhabi which is on the brink of a major financial crisis should the UAE continue to have problems within their financial system due to deteriorating domestic and overseas investments.

062616_SAUDI_TADAWUL_jgflaEven with the low volume rally, look for the Saudi Tadawul to retest the 6,000 price level as oil prices begin their retest of first $40 per bbl. then on to $30.

062616_DUBAI_DFM_jgfla

Dubai wasn’t so lucky and no intervention was forthcoming.

And the only democracy in the region demonstrates what happens when markets are allowed to act as markets should:

062616_ISRAEL_TA25_jgfla

The biggest basket case will be overlooked by the West but Egypt’s historical ties financially and diplomatically with Great Britain are reverberating as their markets were pasted today:

062616_EGYPT_EGX30_jgfla

Stay tuned as tonight could get seriously interesting in Asia with the Spanish election results and more British political turmoil hitting the tape.

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