Saudi Shares Drop on Oil Price Decline, Fed Economic Forecast
Shares in Saudi Arabia, the only Gulf Arab stock market open on Saturdays, fell the most in more than a week as oil prices declined and after the U.S. Federal Reserve cut its economic forecast.
Saudi Basic Industries Corp. (SABIC), the world’s largest petrochemicals maker known as Sabic, dropped for the first time in four days. Saudi Kayan Petrochemical Co. (KAYAN) fell the most since June 12. Al-Rajhi Bank (RJHI), the biggest by market value, lost the most in a week. The Tadawul All Share Index (SASEIDX) retreated 0.9 percent 6,774.26 in Riyadh at the close.
Stocks “are clearly responding to downward pressure in oil,” Jarmo Kotilaine, chief economist at Jeddah-based National Commercial Bank, said in a phone interview. “The oil price is something that fuels the fiscal engine and the broader economic mood.”
Saudi Arabia, the biggest Arab economy that depends on oil exports to support government spending, is the largest producer in the Organization of Petroleum Exporting Countries. OPEC’s basket of crudes dropped on June 22 below $90 a barrel for the first time in more than 17 months.
Fed officials lowered their forecasts for U.S. economic growth and raised their predictions for unemployment in each of the next three years. Policy makers now see 1.9 percent to 2.4 percent growth in 2012, down from their April forecast of 2.4 percent to 2.9 percent.
The Saudi market is “slightly down because of the reduced growth rates in the U.S.,” Turki Fadaak, head of research at Albilad Investment Co. in Riyadh, said today.
Sabic declined 0.5 percent to 91.5 riyals, the lowest close since June 18, while Saudi Kayan fell 1 percent to 15.1 riyals. Al-Rajhi dropped 1 percent to 73.5 riyals.
To contact the reporter on this story: Glen Carey in Riyadh at firstname.lastname@example.org
To contact the editor responsible for this story: Andrew J. Barden at email@example.com