Market Wrap MENA-Asia 8 July: Asian Selloff Deepens and Drags the Gulf and Egypt Lower as Hong Kong Bucks the Trend

Most Asian and Gulf equity markets fell on Wednesday as a renewed global risk-off move deepened, with heavy losses across Asia led by another slump in South Korea, while Hong Kong stood out as the region’s lone strong gainer. The selloff pulled most Gulf markets and Egypt lower, a reversal from the regional resilience of the previous session.

The sharpest falls came from Asia. South Korea’s KOSPI slumped 5.35 percent to 7,246.79, its second steep drop in a week, in a continued retreat from technology and chip names. India’s Nifty 50 fell 2.12 percent to 23,882.05 and Japan’s Nikkei 225 dropped 2.11 percent to 66,819.05, while the broader TOPIX eased 1.37 percent to 4,006.43 and China’s Shanghai Composite slipped 0.49 percent to 3,970.88. The clear exception was Hong Kong, where the Hang Seng jumped 2.99 percent to 24,199.46, bucking the regional trend on strength in Chinese technology and property names listed there.

Gulf markets were mostly lower but far more contained than Asia. Saudi Arabia’s TASI was effectively flat, edging up 0.01 percent to 10,853.73 and proving the region’s most resilient large benchmark, while Oman’s MSX 30 rose 0.91 percent to 7,637.53. Elsewhere the tone was negative: Abu Dhabi’s FTSE ADX General Index fell 0.56 percent to 9,885.05, Bahrain’s All Share eased 0.60 percent to 2,014.13, Qatar’s QE Index dropped 0.77 percent to 10,176.15, and Kuwait’s Premier Market fell 0.79 percent to 9,091.44 with the All Share Index down 0.82 percent to 8,662.26. Dubai’s DFM General was the weakest Gulf market, down 1.51 percent to 6,001.93.

Egypt reversed its recent outperformance. The EGX 30 fell 1.84 percent to 52,028.37, giving back the previous session’s gains, while the Egyptian pound weakened to about 49.57 per dollar, a depreciation of roughly 1.7 percent on the day, our calculation. That made Egypt one of the weaker markets across the combined region, a sharp turnaround from the day before, when it had led.

The direction was uniform even if the magnitudes differed. Using one benchmark per Gulf market, the seven Gulf exchanges fell by a simple average of about 0.47 percent, our calculation, a far shallower decline than Asia, where the six benchmarks in the table dropped by a simple average of about 1.41 percent, our calculation, dragged down by Korea. The full range ran from Hong Kong’s 2.99 percent gain to Korea’s 5.35 percent slide. Unlike the previous session, when the Gulf and Egypt partly decoupled from Asian weakness, this time the risk-off move was broad enough to pull the whole region lower, even if the Gulf again absorbed it better than Asia.

In currencies, the dollar was firmer. The euro eased to 1.1404, sterling slipped to 1.3348 and the yen weakened to 162.48 per dollar. The Egyptian pound was the notable mover, softening to about 49.57 per dollar, while the Kuwaiti dinar was steady at about 0.3077. Bitcoin fell about 2.6 percent to near 62,096, in line with the broader retreat from risk.

For reference, US and European markets last completed a full session on Tuesday 7 July. Wall Street was lower, with the Nasdaq Composite down 1.16 percent at 25,818.69, the S&P 500 down 0.45 percent at 7,503.85 and the Dow Jones Industrial Average down 0.25 percent at 52,925.15, while Europe was mixed, with the UK’s FTSE 100 up 0.13 percent but Germany’s DAX, the Euro Stoxx 50 and France’s CAC 40 all lower. The soft US and European close set the tone for the risk-off move that deepened through the Asian session.

Why it matters: Wednesday showed the Gulf and Egypt cannot fully insulate themselves when a global risk-off move broadens, even though regional markets again fell less than Asia. For MENA investors, the key point is that the technology-led selloff that began in Asian markets has widened into a broader retreat from risk that is now reaching the Gulf and Egypt, with a firmer dollar and a softer Egyptian pound adding a currency dimension. The transmission channel to watch is whether sustained dollar strength and higher US yields tighten regional liquidity through the currency pegs, and whether the pressure on the Egyptian pound persists.

Outlook: The immediate focus is whether the Asian technology selloff stabilises or deepens further, with Korean and Japanese chip names the key drivers, and how Wall Street and Europe respond when they reopen. For the Gulf, the tests are the path of oil after recent volatility and whether local markets can keep limiting the drag from global risk-off moves, while for Egypt the questions are whether the pound steadies and whether the EGX 30 can stabilise after giving back its recent gains.

MENA and Asia equities, 8 July close

US and Europe equities, 7 July close, reference

Rates, FX and crypto, intraday 8 July

Sources: Saudi Exchange; Boursa Kuwait; Abu Dhabi Securities Exchange; Qatar Stock Exchange; Dubai Financial Market; Bahrain Bourse; Muscat Stock Exchange; Egyptian Exchange; CNBC.

Get Complimentary Insights

Follow us