Saudi stocks plunge 5pc on ME tensions
Riyadh, June 15, 2013
Saudi Arabia's stock market plunged 4.6 per cent to a 13-month low on Saturday, with its biggest listed companies losing value, after King Abdullah cut short a holiday abroad because of regional tensions.
Only one of the 156 companies listed on the all-share index, the food-manufacturer Herfy, gained ground. All 155 others fell.
Heavyweight Saudi Basic Industries Corp (Sabic), the world's biggest petrochemical company, fell 2.13 per cent, while Al Rajhi Bank, the kingdom's largest listed lender, lost 4.5 per cent.
King Abdullah arrived back in Riyadh early on Saturday morning from Morocco after ending a holiday to deal with "repercussions of the events that the region is currently witnessing," Moroccan and Saudi state media reported.
The world's top oil exporting nation is a main supporter of Syrian rebels, who have faced serious reverses since the Lebanese Shi'ite Muslim milita Hezbollah entered the war in support of President Bashar al-Assad.
Leading Sunni clerics in the Middle East have used increasingly sectarian language in the weeks since, raising the spectre of wider conflict between Sunnis and Shi'ites in the Middle East.
The index fell to its lowest level since May 7, 2012, with market analysts attributing the drop to geopolitical concerns in a stock market dominated by small-scale retail traders.
However, market liquidity on Saturday was very high, at SR9.7 billion ($2.6 billion), compared to an average this year of less than SR6 billion a day.
"The consensus view is that geopolitical concerns have dominated investors' minds. That's what caused the market to drop," said John Sfakianakis, chief investment strategist at Masic investment company in Riyadh.
"The fundamentals are very obvious for the market to reverse its downward pressure. Once the concern clears out, we should be seeing a reverse of the downward trend," he added.
Early in the day, stocks dropped heavily after global equity markets slide and on events in Syria.
The kingdom's benchmark all-share index fell 1.83 per cent to 83 points while petrochemicals and banking stocks also fell.
The petrochemicals index too was down 1.45 per cent.
US crude hit a nine-month intraday high on Friday, after news that the United States had authorized sending weapons to Syrian rebels led to concerns about Middle East supplies.
US stocks fell on Friday on low volume to end their third negative week in four on lingering concern over whether the world's central banks will soon start to trim their stimulus programs.-Reuters