Gulf stock markets fell in early trade Sunday after Standard & Poor's downgraded Saudi Arabia's sovereign debt while keeping a negative outlook on it because of low oil prices. The other two major rating agencies, Moody's and Fitch, have higher ratings for the kingdom. The government and Saudi companies have minimal foreign debt, so the downgrade will not have any direct financial impact. Nevertheless, S&P's action feeds into investor concern about the long-term direction of Saudi finances in an era of cheap oil, and about the fiscal tightening that Riyadh may have to conduct to get its budget deficit under control. This could in turn affect the rest of the region. The Dubai stock index sank 2.2 percent to 3,425 points after an hour, dropping below technical support around 3,500 points, which had supported it since early September. The size of the market's recent consolidation channel suggests a clean break of support would point down to the August low at 3,241 points. All of the market's 10 most heavily traded stocks dropped with builder Arabtec, which has projects in Saudi Arabia, dropping 6.1 percent. Abu Dhabi's index fell 0.6 percent. However, telecommunications firm Etisalat continued to edge up on hopes that after it opened its shares to buying by institutional investors, MSCI could add the stock to its emerging market index as soon as at its semi-annual review in the middle of next week. Qatar, seen as a defensive market because of high dividend yields and the Qatari government's comfortable financial position, edged down just 0.1 percent. Source: Reuters
