Gulf stock markets fell sharply on Tuesday as Brent crude extended losses after plunging 5 per cent a day earlier and the threat of a fresh euro zone crisis in Greece also prompted investors to sell risk assets globally.

Brent crude touched a fresh 5-1/2-year low at $52.28 a barrel on Tuesday on oversupply concerns. MSCI’s emerging market index was down 0.9 per cent.

Saudi Arabia’s main index dropped 3.9 per cent shortly after opening in a broad sell-off. Shares in petrochemicals giant Saudi Basic Industries (SABIC) tumbled 4.2 per cent.

The kingdom’s market is heavily weighted towards petrochemicals, whose profit margins will suffer from cheaper crude.

Dubai’s bourse tumbled 5.1 per cent. Emaar Properties, the emirate’s largest listed developer, topped trading volume as it lost 8.4 per cent.

However, shares in Air Arabia bucked the trend and added 0.7 per cent after the firm said on Monday it had bought a 49 per cent stake in Jordan’s Petra Airlines and would establish a hub in the country. The carrier may also benefit from the sustained drop in oil prices.

Elsewhere in the Gulf, Abu Dhabi’s index fell 2.3 per cent, Kuwait lost 1.8 per cent and Oman’s bourse slipped 1.1 per cent.

Egypt’s market dropped 2.7 per cent, with most stocks in the red.

As an oil importer, Egypt should benefit from cheaper crude, but its equities are also vulnerable to global emerging market flows and Cairo’s government relies heavily on financial aid from the oil-exporting Gulf states.

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