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Saudi Shares Drop Most in 8 Months on Global Growth Concern, Oil

Saudi Arabia's Oil Minister Ali Al-Naimi
Saudi Arabia's Oil Minister Ali al-Naimi. Photographer: Vladimir Weiss/Bloomberg

April 15 (Bloomberg) -- Saudi Arabia’s shares slumped the most in almost eight months on investor concern that oil prices may retreat amid signs the global economic recovery is slowing and after first-quarter company earnings missed estimates.

Saudi Kayan Petrochemical Co., the company 35 percent-owned by Saudi Basic Industries Corp., lost 6.5 percent after its first-quarter loss widened. Saudi Arabian Fertilizer Co., the company known as Safco also part-owned by Saudi Basic, tumbled to the lowest since February after profit missed analysts’ expectations. Saudi Arabia’s Tadawul All Share Index fell 2.3 percent, the most since Aug. 20, to 7,348.33, at the 3:30 p.m. close in Riyadh.

Crude oil for May delivery fell 0.5 percent last week to $102.83 a barrel on the New York Mercantile Exchange after Saudi Arabia’s oil minister said the kingdom is determined to see lower prices. Saudi Arabia, the world’s biggest oil exporter, derives more than 90 percent of public revenue from oil exports.

“There is a fear that the global economy is slowing down and with it could take oil prices down too,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “Saudi Arabia will stand to lose if this happens because it has committed a large budget expenditure, which means that it could have a large but workable budget deficit.”

Earnings

Emerging-market stocks declined 1 percent last week and the Standard & Poor’s 500 Index retreated 2 percent after Spanish and Italian bond yields fueled concern Europe’s debt crisis is worsening, while China said its economy expanded 8.1 percent in the first quarter, the slowest pace since 2009. U.S. employers added 120,000 jobs in March, less than the median economist forecast of 205,000 in a Bloomberg survey.

Saudi companies started reporting first-quarter financial results this month. Saudi Kayan lost the most since Jan. 17, falling to 17.4 riyals in its 10th day of declines, the longest stretch of losses on record, according to data compiled by Bloomberg. The company’s quarterly loss widened to 71 million riyals ($19 million) from 8.33 million riyals the year earlier.

Safco fell 2.5 percent to 178.5 riyals, the lowest close since Feb. 22. The company said first-quarter profit declined 5.5 percent to 787 million riyals.

The Bloomberg GCC 200 Index decreased 1.2 percent and the DFM General Index declined 0.2 percent. Abu Dhabi’s ADX General Index slipped 0.4 percent and Qatar’s QE Index retreated 0.5 percent. Oman’s benchmark stock index rose 0.4 percent and Kuwait’s gauge gained 0.5 percent. Bahrain’s measure advanced 0.2 percent. Egypt’s stock market was closed for a holiday.

In Israel, the TA-25 Index lost 1.8 percent. The yield on the country’s 5.5 percent notes due January 2022 declined one basis point, or 0.01 percentage point, to 4.6 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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