The Tadawul All-Share Index plunged 2.34 percent to 7,348.33 points, its largest drop since August 2011. The value of traded shares exceeded SR12 billion yesterday.

Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: “To call this a crash would be hasty, but clearly there is concern that the recent rally rather got ahead of itself as investors re-evaluate the situation.”

He said even though the purely Saudi context is very benign and the fundamentals attractive, the recent decline in global risk aversion is now being tested and the Saudi markets have usually been sensitive to such consideration as evinced by years of underperformance in the face of the global woes. 

“In terms of fundamentals, Tadawul could easily have further to mount but the global backdrop may now been laying the foundation for greater volatility,” Kotilaine said.

Shares in Saudi Basic Industries Corp. (SABIC), which approved on Saturday payment of SR15 billion dividends to shareholders at SR5 per share for its operations in 2011, fell 3.87 percent to SR99.25. The other major losers in the Petrochemical sector were Advanced Petrochemical Company, down 9.84 percent, Alujain Corporation, 6.76 percent and Saudi Kayan Petrochemical Company, 6.45 percent.

"We were disappointed with petrochemicals' results, we thought they would have been able to drive the market through 8,000 points," Reuters quoted Hesham Tuffaha, Bakheet Investment Group head of asset management, as saying.