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Saudi Shares Drop the Most in a Month; Al Rajhi Retreats

Saudi Arabia’s shares declined the most in almost a month as oil prices traded below $80 a barrel, raising investor concern that the world’s top oil exporter may reduce the size of a $500 billion government stimulus.

Nama Chemicals Co., a developer of industrial projects, plunged 6.1 percent. Al Rajhi Bank, the kingdom’s biggest lender by market value, fell the most since June 2. The Tadawul All Share Index lost 1.7 percent, the biggest drop since June 2, to 6,585.63 at the close in Riyadh. The measure has lost 16 percent this quarter, poised for the worst since the fourth quarter of 2008. The Bloomberg GCC 200 Index retreated 0.8 percent.

“Oil below $80 just creates a psychological effect that the government will reduce spending and the economy will be affected,” said Marwan Shurrab, assistant fund manager and chief trader at Gulfmena Investments Ltd in Dubai. The drop “is more related to global growth and global demand for commodities,” he said.

Oil traded below $80 for a fifth day on speculation demand is faltering as U.S. crude stockpiles increase. Prices had risen to as much as $110.55 a barrel this year, enabling the Saudi government to push through with spending plans that have cushioned economic growth. The economy may expand 4.8 percent this year, second only to Qatar in the six-nation Gulf Cooperation Council, according to the estimates of 12 economists on Bloomberg.

‘Further Deterioration’

Oil for August delivery fell to as low as $78.68 in electronic trading on the New York Mercantile Exchange before trading at $79.75 at 4:47 p.m. in Dubai. The GCC, which also includes the United Arab Emirates, Kuwait, Bahrain, Qatar and Oman, holds one-fifth of the world’s proven oil reserves.

“Today is the last day of the week so there are fears of further deterioration of commodity prices over the weekend and this is affecting sentiment aggressively,” Shurrab said. Saudi Arabia’s weekend falls on Thursday and Friday.

Nama declined to 13.80 riyals, the lowest close since June 9. Al Rajhi lost 2.1 percent to 71.75 riyals.

Dubai’s DFM General Index fell 0.2 percent and Abu Dhabi’s ADX General Index retreated 0.5 percent. Qatar’s QE Index declined 0.3 percent, Bahrain’s gauge lost 0.4 percent and Oman’s MSM30 Index fell 0.1 percent. Kuwait’s measure was little changed.

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