Bloomberg/Riyadh
Saudi Arabian shares fell the most in two weeks yesterday after reports signalled the global economic recovery is faltering, damping investors’ appetite for riskier assets and as oil declined.Saudi Basic Industries Corp (Sabic), the world’s biggest petrochemicals maker, and Al Rajhi Bank, the kingdom’s largest publicly traded lender, sank more than 2%. The 147- company Tadawul All Share Index lost 2.6%, the sharpest decline since August 6, to 5,931.29, at the 3.30pm close in Riyadh, extending this month’s slump to 7.2%. All 15 industry groups retreated.The Standard & Poor’s 500 Index of US stocks tumbled 5.9% and the Stoxx Europe 600 Index lost 6.3% over the previous two days, the Saudi weekend. Reports showed jobless claims rose in the world’s largest economy and Philadelphia-area manufacturing shrank by the most since 2009, while investors speculated that European banks lack sufficient capital.“The market is reacting to negative signals coming from international markets as well as the weak economic performance in Europe and the US,” said Akef Al Tanbouz, head of asset management at The Investor Securities in Riyadh.Morgan Stanley cut its forecasts last week for global growth this year, saying the US and Europe are “dangerously close to recession.” JPMorgan Chase & Co lowered estimates for the US, saying it may expand less than previously projected in the next two quarters as consumer sentiment drops and the housing market fails to gain momentum. Citigroup Inc also cut its projection for the US.Oil prices fell 3.7% last week in New York, capping an 18% slump since July 22, the biggest four-week decline since October 2008. Saudi Arabia holds 20% of the world’s proven oil reserves.Sabic retreated 3.6% to 93 riyals, its lowest price since March 5. National Industrialisation Co, the petrochemical company known as Tasnee, plunged 6% to 35.9 riyals. Al Rajhi declined 2.9% to 68 riyals.“Basically the market is reacting to the plunge in global equities and commodities,” said Fuad Aghabi, a director at Ajeej Capital in Riyadh. “Confidence levels are lower because of the ongoing global volatilities on fears of another US downturn and European debt woes.”More than $8tn has been erased from the value of global equities in the past four weeks on concern the US may enter a recession and as an intensifying European debt crisis evoked memories of late 2008, when credit markets froze after Lehman Brothers Holdings Inc collapsed.“Concerns around growth in major economies have now firmly taken hold,” said Asim Bukhtiar, an equity analyst at Riyad Capital. “Investors may be reluctant to add new positions ahead of the Eid holidays.”The Saudi Arabian market will close on August 27 for the Eid Al Fitr holiday and trading will resume on September 3.Saudi Arabia’s stock exchange is the only Gulf Arab bourse open on Saturdays.