Saudi Shares Drop on Earnings Concern, Politics; Dubai Retreats

Saudi stocks dropped the most in almost two weeks on concern quarterly results at the kingdom’s biggest companies may miss estimates and as security forces arrested a dissident, stoking concern tensions may escalate.

Qassim Cement (QACCO) Co., a Saudi Arabian producer of the building material, fell 1.5 percent after second-quarter profit missed analysts’ forecasts. Saudi Telecom Co. (STC), the kingdom’s largest phone company, slumped the most since March 2011. The Tadawul All Share Index (SASEIDX) declined 1.4 percent, the biggest decrease since June 27, to 6,756.99 at the close in Riyadh. The DFM General Index (DFMGI) slipped 0.4 percent and the Bloomberg GCC 200 Index (BGCC200) lost 1 percent.

“Investors are waiting for results of the bigger Saudi companies, including Sabic, and are worried some may disappoint,” said Turki Fadaak, head of research at Riyadh- based Albilad Investment Co.

Saudi Basic Industries Corp., the world’s largest petrochemicals maker known as Sabic and the second-heaviest weighting on the index, may announce a 17 percent drop in net income to 6.72 billion riyals ($1.8 billion), according to the mean estimate of five analysts compiled by Bloomberg. Saudi Telecom, which may also report lower profit, decreased 5.2 percent to 36.7 riyals.

Qassim Cement’s second-quarter profit of 149 million riyals missed the 155 million-riyal mean estimate of six analysts. The shares dropped the most since June 5, falling to 79.75 riyals.

Dissident Arrested

Emerging-market stocks retreated after Chinese Premier Wen Jiabao said the nation’s economy faces “relatively large” downward pressure, and as U.S. jobs data missed estimates. The MSCI Emerging Markets Index (MXEF) dropped 1.1 percent. Separately, European finance ministers prepared to meet to work out crisis measures after leaders agreed last month to ease access to direct financing for banks and bailout mechanisms.

“The external backdrop is uninspiring and Saudi currently correlates strongly on the downside,” said Julian Bruce, the Dubai-based director of institutional sales trading at EFG- Hermes Holding SAE. “There have been signs of unrest in the Eastern province.”

In Saudi Arabia, security forces arrested dissident Shiite cleric Nimr al-Nimr in the al-Qatif area of the oil-rich Eastern Province, the Saudi Press Agency reported, citing an Interior Ministry spokesman. While Sunni-majority Saudi Arabia largely escaped the unrest that spread across the Arab world last year, Shiite protesters have clashed this year with security forces in Awwamiya, al-Qatif and other eastern towns.

Ramadan Approaching

The kingdom has accused Shiite-led Iran of interfering in the affairs of Arab countries in the Persian Gulf, home to three-fifths of the world’s oil reserves. Iran denies the allegation and accuses Sunni rulers in Bahrain and Saudi Arabia of discriminating against Shiites.

About 363 million shares were traded on the Tadawul today, compared with a 12-month daily average of 328 million shares. The Islamic holy month of Ramadan, when Muslims fast from sunrise to sunset and business slows, will start later this month.

Saudi Airlines Catering Co. (CATERING), the Saudi company that provides airline catering services, rose 15 percent to 62 riyals in its trading debut.

Abu Dhabi’s ADX General Index (ADSMI) gained 0.1 percent, while Qatar’s QE Index lost 0.3 percent. Bahrain’s measure fell 0.4 percent. Kuwait’s gauge and Oman’s benchmark stock index decreased 0.5 percent.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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