Saudi Shares Drop Most in 2 Weeks on Speculation Gains Overdone
December 27, 2011, 11:21 PM ESTBy Mourad Haroutunian
Dec. 27 (Bloomberg) -- Saudi Arabia’s benchmark stock index retreated the most in two weeks amid speculation gains this month prompted by optimism the world’s biggest oil exporter will increase spending in 2012 was overdone.
Saudi Basic Industries Corp., the world’s largest petrochemicals company, fell for the first time in five days. Jarir Marketing Co., Saudi Arabia’s largest stationery and bookseller by market value, dropped the most since March. The Tadawul All Share Index weakened 0.2 percent, the biggest decline since Dec. 13, to 6,400.10 at the 3:30 p.m. close in Riyadh, trimming the monthly gain to 4.8 percent. The Bloomberg GCC 200 Index dropped 0.3 percent.
“Over the past week the Saudi market was trickling upwards based on investors expecting a good budget announcement,” said Samer Darwiche, a Dubai-based financial analyst at Gulfmena Investments. “After the positive budget announcement, some investors are booking profits.”
The Arab world’s largest economy plans to spend 690 billion riyals ($184 billion) next year, 19 percent above its target for 2011, the Riyadh-based Finance Ministry said on its website yesterday. Revenue next year is projected at 702 billion riyals, above last year’s target of 540 billion riyal and less than this year’s actual revenue of 1.11 trillion riyals.
Budget Surplus
King Abdullah announced a $130 billion spending plan earlier this year to build homes and combat unemployment of 10 percent. The kingdom forecast a budget surplus of 12 billion riyals next year as the government boosts planned spending while investing to create jobs. The country had a surplus of 306 billion riyals this year, compared with the 40 billion-riyal deficit foreseen in the budget announced a year ago.
Sabic dropped for the first time since Dec. 20, down 0.3 percent to 96.25 riyals. Jarir fell 4 percent, its biggest decline since March 1, to 138.25 riyals.
“There is profit taking in the market across the board following the run-up over the past seven sessions,” said Asim Bukhtiar, an equity analyst at Riyad Capital. “Investors are locking in gains.”
The 150 companies listed on the Tadawul trade at about 14 times reported earnings, according to data compiled by Bloomberg. That compares with about 11 times for the MSCI Emerging Markets Index.
Dubai’s DFM General Index fell 0.8 percent and Abu Dhabi’s ADX General Index slid less than 0.1 percent. Bahrain’s measure and Oman’s MSM30 Index retreated 0.3 percent. Kuwait’s gauge declined 0.2 percent, while Qatar’s QE Index advanced 0.2 percent.
--Editors: Shanthy Nambiar, Claudia Maedler
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
