Saudi index nosedives to 18-week low on concerns

07/06/2012 08:50 AST

Saudi Arabia’s index reversed early gains to slump to an 18-week closing low Wednesday as global uncertainty prompted investors to cut positions ahead of the Kingdom’s weekend.

The stock benchmark Tadawul All Share Index fell 1.12 percent to close at 6,661.26 points, its lowest since Jan. 31. The market is volatile, trading in a 2.9 percent range in the final session before the local Thursday-Friday weekend.

“We are not sure what caused the dramatic change in the market - of course, one reason was that traders were giving up positions to cut risk (exposure) to global factors ahead of the weekend,” said Hesham Tuffaha at Bakheet Investment Group head of asset management. Rumors about possible announcements by the Saudi regulator to crack down on market speculation may have also sparked the decline, some analysts said.

Heavyweights Saudi Basic Industries Corp. and Saudi Telecom Co led declines, falling 1.1 and 1.5 percent respectively.

Property firm Dar Al Arkan plunged 6.6 percent.

Banks also retreated. SABB dropped 2.7 percent and Banque Saudi Fransi shed 0.3 percent. “We have seen very volatile trading today. It’s unclear how markets will react when it reopens next week,” said Tuffaha.

Elsewhere, Dubai’s benchmark edged up 0.4 percent, taking its year-to-date gains to 7 percent.

Abu Dhabi’s benchmark advanced 0.07 percent.

Qatar’s index snaps a six session losing streak as it rose 0.2 percent.

Kuwait’s index resumed its decline, slipping 0.7 percent. The bourse has now ended down in 13 of the last 16 sessions.

Oman index rose 0.3 percent to 5,784 points. Bahrain measure added 0.06 percent to 1,132 points.

Egypt measure fell 0.4 percent to 4,485 points.

Meanwhile, oil prices headed higher Wednesday, joining stock markets in welcoming the European Central Bank’s signals of support to ailing eurozone banks.

The ECB’s keeping interest rates on hold rather than cutting them also helped the euro strengthen, pulling crude prices up with it.

New York’s main contract, West Texas Intermediate crude for delivery in July, ended the day at $85.02 a barrel, up 73 cents from Tuesday’s closing level. In London, Brent North Sea crude for July, added $1.80 to settle at $100.64 a barrel.

Saudi Gazette