Saudi stock market slumps to 2-month low

Saudi Arabia’s bourse slumped to a two-month low yesterday amid a region-wide decline.
The Tadawul All-Share Index (TASI) fell 1.42 percent to finish at 6,878.72 points, its lowest close since July 31.
Asim Bukhtiar, vice president and head of research, Riyad Capital, said the TASI’s decline reflected deteriorating investor confidence in global economic recovery.
He said the earnings season kicks off next week and all eyes will be on petrochemical stocks and banks, two of the largest sectors on the market.
“Weaker commodity prices are expected to weigh on petrochemical results, while moderation in lending and tempering earnings growth will hold back bank shares,” Bukhtiar said.
Selling pressure was across the board with main sectors of petrochemical stocks losing 1.51 percent and the banking sector was down 1.01 percent.
Saudi Basic Industries Corp. (SABIC) dropped 1.10 percent to SR 89.75, National Industrialization shed 2.52 percent to SR 30.90 and Saudi Kayan Petrochemical declined 1.89 percent to SR13.
“We are still looking at a highly uncertain global economic situation,” said Jarmo T. Kotilaine, a regional economist, commenting on market developments.
“Even if the recent steps toward more unconventional easing by the main central banks around the world may have reduced the immediate meltdown risk, the structural problems persist,” he said.
Kotilaine said there is a great deal of speculation about the timing of a formal bailout for Spain and Italy, although both now seem highly likely, not least because they constitute a precondition for ECB support.
“Doubts are also mounting about the effectiveness of yet more quantitative easing, as reflected by shaky stock markets in Asia and Europe,” he said.
Basil Al-Ghalayini, CEO of BMG Financial Group, said: “We are definitely noticing a healthy liquidity in the market. However, there is some nervousness from major markets’ decline as a result of the growing Spanish debt crisis impact.”