Saudi Arabia’s Stocks Decline on Global Growth Concern

Saudi Arabia (SASEIDX)’s stocks fell as concern about the global economy overshadowed speculation that the Federal Reserve will introduce new stimulus for the U.S.

Etihad Etisalat Co. (EEC), a Saudi Arabian telecommunications provider, declined the most in a month. Banque Saudi Fransi, which is partly owned by Credit Agricole SA, dropped the most in more than six weeks. Saudi Arabian Fertilizer Co. (SAFCO), a unit of Saudi Basic Industries Corp. (SABIC) known as Safco, slipped to its lowest price since July 23.

The Tadawul All Share Index retreated 0.1 percent to 7,134.24 at the close in Riyadh, its lowest level since Aug. 26. The biggest stock market in the Middle East and North Africa has rallied 11 percent this year.

“The stimulus is looking a lot more likely than it did, but it is not a done deal yet,” Jarmo Kotilaine, the chief economist of National Commercial Bank in Jeddah, said by phone. “The stimulus is on the cards because the economic situation is very messy.”

Global equities declined earlier in the week as reports showed economic confidence in the euro area and retail sales in Japan fell more than estimated. The U.S. economy climbed at a 1.7 percent annual rate from April through June, up from an initial estimate of 1.5 percent. Separate reports showed more Americans than forecast filed for unemployment benefits, a sign that progress in the labor market is faltering.

Federal Reserve Chairman Ben S. Bernanke said on Aug. 31 that the Fed will “provide additional policy accommodation as needed to promote a stronger economic recovery.” The Fed chairman spoke at the Kansas City Fed’s annual economic-policy symposium in Jackson Hole, Wyoming. The Federal Open Market Committee’s next meeting comes in two weeks.

Etihad Etisalat declined 1.1 percent to 69.25 riyals, while Banque Saudi Fransi (BSFR) slid 1.5 percent to 32.40 riyals. Safco dropped 0.9 percent to 185.25 riyals.

Saudi Arabia’s stock exchange is the only Persian Gulf bourse that opens on Saturday.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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