Saudi Shares Fall on Quarterly Results Outlook, Global Economy

Shares in Saudi Arabia declined to the lowest in two months ahead of quarterly company financial results and on concern that Europe’s debt crisis is worsening.

Al-Rajhi Bank, the kingdom’s largest lender by market value, dropped for a fourth day, while Samba Financial Group fell to the lowest since July 25. National Industrialization Co. slipped the most since June 2. The Tadawul All Share Index retreated 1 percent to 6,807.71, the lowest since July 29, at the 3:30 p.m. close in in Riyadh. Saudi companies start reporting third-quarter results this week.

“We expect a weaker morning session as third-quarter results weigh on investors’ minds,” Asim Bukhtiar, head of research at Riyad Capital, said in an e-mail. “Subdued international sentiment will guide local direction.”

Global stocks fell after data during the week showed the U.S. economy grew 1.3 percent in the second quarter, less than previously estimated, while monthly U.S. business activity unexpectedly contracted for the first time in three years. China’s manufacturers and retailers are less optimistic about sales than they were three months ago and are cutting jobs, according to a survey.

European leaders have clashed on ways to stem the region’s debt crisis. The Bank of Spain said the economy kept falling at a “significant pace” in the third quarter, and the government announced its fifth austerity package in what may be a move to head off tougher conditions demanded as part of a potential European bailout.

Al-Rajhi lost 0.7 percent to 71 riyals, the lowest level since June 6, while Samba dropped 0.7 percent to 44.5 riyals. Al-Rajhi’s third-quarter profit may climb 7 percent, according to the mean estimate of three analysts on Bloomberg, after posting a 14 percent increase in the second quarter. Samba’s profit for the period may remain unchanged after a 5 percent increase in the second quarter, according to data compiled by Bloomberg.

Mobile Telecommunications Co. of Saudi Arabia, also known as Zain Saudi, dropped 6.1 percent to the lowest since December. The company said it obtained a two-month extension on a 9.75 billion-riyal ($2.6 billion) Islamic loan, the second extension on the facility, and that it expects to complete a long-term financing agreement.

Saudi Arabia’s stock exchange is the only Persian Gulf bourse operating on Saturdays.

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