Talk of Weaning Off Oil Is Cheap as Gulf Stocks Mirror Crude - Bloomberg Business

Talk of Weaning Off Oil Is Cheap as Gulf Stocks Mirror Crude - Bloomberg Business:



"Pledges by Gulf states to diversify their economies away from a dependence on oil are winning few believers in the stock market.



The correlation between the price of Brent and the biggest equities in the six-nation Gulf Cooperation Council that make up the Bloomberg GCC 200 Index has increased to the strongest in five years and is almost as strong as any time since 2006. By contrast, the oil correlation for Russia’s benchmark Micex Index has almost disappeared, even though the nation produces almost as much oil as Saudi Arabia.


Investors in the GCC’s $1 trillion equity markets are concerned that the drop of more than 50 percent in oil prices will force governments to cut spending, a key driver of economic growth. Officials have pledged to shield their economies from the swings in crude prices by boosting investment in non-oil industries. While the United Arab Emirates has reduced its reliance on energy, Saudi Arabia, OPEC’s biggest exporter, still depends on oil for almost all its revenue."



'via Blog this'