Bloomberg News

Saudi Shares Drop to Lowest Since March on Slowing World Economy

June 11, 2011

June 11 (Bloomberg) -- Saudi Arabian shares plunged to the lowest level since March after data from the U.S., India and China fueled concern that global economic growth is slowing.

Al Rajhi Bank, the kingdom’s largest publicly traded lender by market value, led the decline. Saudi Basic Industries Corp., the world’s biggest petrochemicals maker, slid 0.2 percent and National Industrialization Co. fell for a fourth straight day.

The 146-member Tadawul All Share Index dropped 0.5 percent to 6,509.48 at the 3:30 p.m. close in Riyadh, the lowest since March 28, bringing its three-day retreat to 2.2 percent. Three shares dropped for every two stocks that rose.

“Investors fear a slow global economy will lower demand for Saudi petrochemicals,” Turki Fadaak, an analyst with AlBilad Investment Co., said in Riyadh.

China yesterday reported a $13.1 billion trade surplus in May, missing the $19.3 billion median estimate in a Bloomberg News survey, as export growth slowed.

India reported that output at factories, utilities and mines rose 6.3 percent in April from a year earlier after an 8.8 percent gain in March. China and India are the world’s second- and fourth-biggest oil-consuming countries. Saudi Arabia holds one-fifth of the world’s proven oil reserves.

‘Frustratingly Slow’

On June 8, U.S. Federal Reserve Chairman Ben S. Bernanke said the “uneven” and “frustratingly slow” economic recovery warrants continued monetary stimulus. Even so, he gave no indication that he plans a third round of asset purchases known as quantitative easing.

“The Saudi market is reacting to the U.S. and global markets ending the week on a negative note,” said Fuad Aghabi, investment director at Ajeej Capital in Riyadh. “Weak international economic data and the global stock price movements last week are probably giving the local investor indicators that the global economy maybe hitting a soft patch in its road to recovery.”

The MSCI All-Country World Index slid 1.4 percent yesterday. The Standard & Poor’s 500 Index dropped 1.4 percent and the Stoxx Europe 600 index slumped 1.3 percent. Oil in New York dropped 2.9 percent to $99.29 a barrel.

Al Rajhi dropped 1 percent to 72.75 riyals, the largest loss in a week. Petrochemicals maker Sabic lost as much as 2.2 percent to 100.50 riyals, before closing 0.2 percent down at 102.50 riyals, the lowest price since March 28. Samba Financial Group, the kingdom’s second-biggest lender by market value, slumped 1.9 percent, the steepest loss in three months, to 50.50 riyals. National Industrialization, the petrochemicals maker known as Tasnee, declined 0.7 percent to 41.40 riyals.

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

--Editors: Marthe Fourcade, Ross Larsen, Philip Sanders

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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