JEDDAH: After surging 1.22 percent on Monday, the Saudi stock market dropped sharply yesterday with all sectors in negative territory. Other Gulf stock markets also closed lower yesterday after the confirmation by the National Bureau of Economic Research (NBER) the US economy has been in recession since December 2007.
The Tadawul All-Share Index (TASI) plunged 4.33 percent or 207.50 points to 4,588.26 as the Eid Al-Adha holiday approached.
The TASI, which had started trading with a loss of six percent, was dragged down by the leading petrochemicals and banking sectors. The petrochemical sector plummeted 5.56 percent as the bellwether Saudi Basic Industries Corp. (SABIC) shares dived 3.36 percent to close at SR50.25. All other companies in this sector also suffered huge losses.
The banking sector declined 3.77 percent and shares in Al-Rajhi Bank fell 3.79 percent, Riyad Bank 5.78 percent, Samba Financial Group 5.27 percent, Bank Albilad 5.62 percent and Alinma Bank 5.48 percent. The gainers were Saudi Investment Bank, Saudi Hollandi Bank and SABB (The Saudi British Bank).
Out of 125 stocks traded, shares in 119 companies were in the red, while only six companies bucked the trend.
The stock market turnover was over SR5.39 billion yesterday compared to SR6 billion on Monday. Meanwhile, according to the Kuwait-based Global Investment House (Global),the market cap of the MENA (Middle East and North Africa) stock market went down by as much as 47 percent till Nov. 25, making the region one of the worst performers globally despite high growth expected in the region and much lower levels of exposure to subprime.
Saudi Arabia’s market has been impacted the worst with the market cap erosion to GDP ratio standing at 68.2 percent.
The market cap to GDP ratio of Saudi Arabia stood at 133.1 percent at the end of 2007, nearly in line with world markets despite higher growth expected in the region. However during 2008, the stock market has tumbled nearly 59.9 percent so far this year with the ratio now standing at 52.8 percent indicating a glaring opportunity to enter the market and make long-term gains. The Egyptian stock market is another market that has been badly impacted with its market cap eroding by as much as 62.0 percent as compared to 2007. The total market cap erosion as a percentage of estimated GDP forecast of 2008 now stands at 59 percent.
Yesterday, the Kuwait Stock Exchange fell one percent to 8,763.70 points. Doha Securities Market was down 3.26 percent to below the key 6,000-point mark, while Muscat Securities Market was one percent lower and Bahrain Stock Exchange lost 0.6 percent. The Dubai and Abu Dhabi were closed for a national holiday in the United Arab Emirates.
