Shares on Saudi Arabia’s stock exchange, the Arab world’s biggest, had the largest drop in almost two years, led by banks and telecom companies, amid concern that fighting in Syria may escalate.
Al Rajhi Bank, the biggest Saudi lender by market value, slid the most since August 2011, while Etihad Etisalat Co., known as Mobily, also tumbled. Saudi Basic Industries Corp., the world’s biggest petrochemical maker, known as Sabic, fell to the lowest level since May 15.
The Tadawul All-Share Index declined 4.3 percent to 7,294.38, the biggest slump since August 2011, at the 3:30 p.m. close in Riyadh, the capital. The gauge has gained 7.3 percent this year.
“Today’s decline in the Saudi stock index is mainly linked to the geopolitical tensions in Syria and how it may impact the region overall,” Mohammed Al-Omran, president of the Gulf Center for Financial Consultancy in Riyadh, said today in a phone interview. “There are diplomatic movements by international leaders to arm Syrian rebels, and the sudden return of King Abdullah following such news alarmed people.”
King Abdullah interrupted his vacation in Morocco yesterday and returned to Jeddah because of “escalating concerns relating to events in the region,” the state-owned Saudi Press Agency said. The same day, Saudi Sheikh Saud al-Shuraim, an Imam at the Grand Mosque in Mecca, denounced in a sermon what he referred to as “tyranny” in Syria under President Bashar al-Assad.
The conflict in Syria, which has killed at least 93,000 people based on a United Nations’ study, is threatening to become a larger regional proxy war as the U.S. steps up its involvement in the conflict.
President Barack Obama decided to send light weapons to the Syrian opposition as the Assad regime made military gains on the battlefield. Regime forces supported by fighters from the Iranian-backed Hezbollah have moved north after defeating rebels in al-Qusair, a setback that triggered concern in Washington that Iran and its Lebanese ally are tipping the balance in favor of Assad.
The U.S. has located 300 Marines in northern Jordan near the border with Syria along with a Patriot anti-aircraft missile system, the London-based Times reported. The deployment north of Al-Mafraq is being described as a military training exercise but it will remain in place for several months, the newspaper said.
“The king returned to Saudi Arabia perhaps because of what is coming up in Jordan regarding the Syrian civil war,” Ted Karasik, director of research at the Institute for Near East and Gulf Military Analysis in Dubai, said in a phone interview. “What is going to happen is that some Arab nations, particularly Saudi Arabia, are going to ask the Free Syrian Army to move to the south in safe haven that perhaps may contain a no-fly zone.”
Al Rajhi slid 4.5 percent to 68.75 riyals, while Mobily lost 4.1 percent to 77 riyals. Sabic dropped 2.1 percent to 91.75 riyals.
Saudi Arabia’s stock exchange is the only Persian Gulf bourse operating on Saturdays.