March 9, 2016 / 5:48 AM / 2 years ago

MIDEAST STOCKS-Gulf may consolidate after oil, global bourses soften

DUBAI, March 9 (Reuters) - Stock markets in the Gulf may consolidate and digest recent gains on Wednesday after oil prices and global equity markets lost steam.

There is still a strong belief that oil has probably bottomed out, but with Brent crude back below $40 a barrel and Asian stocks slightly lower on Wednesday morning, profit-taking may play a bigger role in the Gulf.

Saudi Arabia’s stock index is up 16 percent since mid-February and Dubai is up 31 percent from its January low.

In a reminder of the pressures on the region’s economic growth from low oil prices, Saudi Arabian retailer Jarir Marketing warned late on Tuesday that its sales would plunge by as much as 30 percent year-on-year in the first quarter of this year.

The decline is partly because sales were unusually high in the first quarter of 2015, when they hit 1.9 billion riyals ($507 million) as King Salman granted a bonus of two months’ salary to state employees to mark his accession to the throne.

But the projected drop is also due to state austerity measures in response to low oil prices, which have cut many Saudis’ disposable income.

Also on Tuesday, Saudi Arabia’s Ministry of Labour said that in an effort to provide more jobs to Saudi Arabian citizens, the kingdom would ban foreign workers from selling and maintaining mobile phones and accessories for them.

The announcement may signal more aggressive state intervention in the labour market to reduce unemployment among Saudi citizens, even if that means higher costs for companies dependent on foreign workers such as retailers and construction firms. (Reporting by Andrew Torchia)

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