Bloomberg News

Saudi Shares Slide as U.S. Jobs Data Sparks Oil-Demand Concern

June 04, 2011

June 4 (Bloomberg) -- Saudi Arabian shares tumbled the most in almost three months, led by petrochemical companies, after a smaller-than-forecast increase in U.S. payrolls heightened concern that a slower economic recovery will curb oil demand.

Saudi Basic Industries Corp., the world’s biggest petrochemicals maker, and National Industrialization Co. fell more than 2 percent. Al Rajhi Bank, the kingdom’s largest publicly traded lender by market value, declined 1.7 percent.

The 146-member Tadawul All Share Index fell 1.7 percent to 6,624.95 at the 3:30 p.m. close in Riyadh, the biggest loss since March 15. All 15 industry groups dropped.

The U.S. economy added the fewest number of workers in eight months in May and unemployment unexpectedly rose to 9.1 percent, according to a Labor Department report yesterday. Employers added 54,000 workers to payrolls, missing the median forecast in a Bloomberg survey for an increase of 165,000.

“Investors are worried that demand for oil will drop after yesterday’s negative U.S. jobs data,” Turki Fadaak, an analyst with AlBilad Investment Co., said in Riyadh. “The possibility of OPEC increasing oil output also heightened concern.”

The Organization of Petroleum Exporting Countries will respond at its June 8 conference in Vienna if the world needs more crude, Saudi Oil Minister Ali Al-Naimi said on June 2.

Oil in New York dropped 0.2 percent yesterday. Crude for July delivery settled at $100.22 a barrel on the New York Mercantile Exchange. Prices declined 0.4 percent this week. Saudi Arabia holds one-fifth of the world’s proven oil reserves.

Sabic, Tasnee

Sabic declined 2.6 percent to 104.25 riyals, the lowest price since March 29. National Industrialization, the petrochemicals maker known as Tasnee, fell 2.3 percent to 42.80 riyals.

Al Rajhi dropped 1.7 percent to 74.25 riyals, the largest loss since March 14.

The MSCI All-Country World Index slid 0.4 percent yesterday, bringing its three-day retreat to 2.4 percent. The Standard & Poor’s 500 Index fell 1 percent and the Stoxx Europe 600 index declined 0.4 percent.

“As global markets continue their slump, local investors are taking the opportunity to gain some profits in anticipation of better buying opportunities before the end of June,” said Fuad Aghabi, investment director at Ajeej Capital in Riyadh.

Saudi Arabia’s stock exchange is the only Gulf Arab bourse open on Saturdays.

--Editor: Andrew Rummer

To contact the reporter on this story: Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net


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