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Saudi Stocks Drop, Tracking Global Rout, Led by Sabic, ACIG; Sipchem Rises

Saudi Arabian shares slumped on the week’s first day, led by insurance and petrochemicals companies, as global stock markets and oil declined after a report showed the U.S. added fewer jobs than expected last month.

Al-Ahlia Cooperative Insurance, Allied Cooperative Insurance Group (ACIG) and Saudi Basic Industries Corp., the world’s largest petrochemical maker, helped the Saudi Tadawul All Share Index to slide as much as 3.06 percent and fell 1.23 percent to 5927.45 at 3:30 p.m. local time.

“The sell-off is coupled with global market psychology,” said John Sfakianakis, chief economist at Banque Saudi Fransi. “Investors are selling off in anticipation of a further market decline which took a beating in the U.S. and Europe yesterday as sovereign concerns mounted and a weak U.S. employment market didn’t help sentiment.”

U.S. and European stocks sank yesterday, as slower-than- estimated U.S. jobs growth spurred concern a recovery in the world’s largest economy may not be as robust as forecast. The Labor Department said that payrolls rose by 431,000 in May, missing the 536,000 forecast in a Bloomberg News survey.

The S&P 500 Index declined 3.4 percent to 1,064.88, the lowest in four months, and the Dow Jones Industrial Average sank 324.06 points, or 3.2 percent, to 9,931.22. The Stoxx Europe 600 Index sank 1.8 percent to 244.53, trimming the week’s gain to 0.2 percent.

Crude oil declined 4.2 percent to $71.51 a barrel on the New York Mercantile Exchange. Saudi Arabia holds 21 percent of the world’s proven oil reserves.

Al-Ahlia fell 4.9 percent to 49 riyals, the lowest since April 2009. ACIG tumbled 7 percent to 33.3 riyals, the lowest since February of last year, and Sabic fell 2.9 percent to 83.25 riyals.

Among gainers, Saudi Electricity Co. rose 9.81 percent, its biggest intraday rise since June 2006, to 11.75 riyals, after the state-controlled power producer signed a contract with a group including GDF Suez SA and Aljomaih Holding Co. to establish a company to develop a 7.9 billion-riyal ($2.1 billion) power project in Riyadh.

Saudi International Petrochemical Co., or Sipchem, jumped 8.2 percent to 21.9 riyals after it announced it began commercial operations at a carbon-monoxide plant in Jubail, with a production capacity of 345,000 metric tons a year.

Saudi Arabia’s index is the only Arab Gulf index tracked by Bloomberg that trades on Saturday.

To contact the reporter on this story: Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net

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