Saudi Arabian stocks, opened last week to foreign investors for the first time, sank the most in 12 weeks following a decline in the price of crude oil.
The Tadawul All Share Index retreated 1.7 percent to the lowest level in more than two months. Al Rajhi Bank, the lender with the biggest weighting on the gauge, led the decline with a 2.9 percent drop, followed by National Commercial Bank’s 3.1 percent slide. Saudi Basic Industries Corp., the world’s top petrochemicals manufacturer by sales, dropped 2.2 percent.
“It’s a reaction to the weakness of oil prices on Friday,” Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi, said by telephone on Sunday. “Investors are selling as there wasn’t the spike they were expecting after the market opened up for direct foreign investment.”
Foreign ownership of the kingdom’s shares was little changed at the end of the week at 1.2 percent, even after overseas investors started trading them directly on Monday. The world’s biggest oil exporter opened its stock market to direct foreign investment as it seeks to diversify its $752 billion economy away from crude. Oil income accounts for about 90 percent of Saudi Arabia’s revenue.
Brent crude, a benchmark for more than half of the world’s oil, fell 1.9 percent on Friday to $63.02 per barrel.
Qualified foreign investors hold 0.02 percent of Saudi International Petrochemical Co., the most of any stock in the kingdom, according to bourse data. The country’s benchmark stock index has declined every day since it opened on Monday, losing more than 3 percent in the period.
“Stocks like Sabic and banking shares in general were supposedly the targets for foreigners, but since they’re not coming here for another few months in any meaningful way, people are not buying or holding their positions in these shares,” Mohammed Alsuwayed, a Riyadh-based financial analyst and partner at SPT Investors LLC, said by phone.
The Tadawul is one of only two gauges in the Arab market that moved more than 1 percent on the first Sunday during the month of Ramadan, when Muslims fast from dawn till dusk and working hours are reduced. Qatar’s QE Index added 1.1 percent, led by Ezdan Holding’s 5.9 percent increase.
Trading volumes in all Arab stock gauges were below their 12-month daily averages. Kuwait’s measure retreated 0.4 percent and Bahrain and Oman’s gauges lost 0.1 percent each. Dubai’s DFM General Index gained 0.8 percent and Abu Dhabi’s ADX General Index climbed 0.4 percent.
“Foreign investors are absent and local investors are either out of the country or taking it easy,” Muhammad Shabbir, the head of equities at Rasmala Investment Bank Ltd., said by phone from Dubai. “It’s very hard for local investors to find the energy to invest.”
Middle Eastern markets had already slowed before Ramadan’s start on Thursday in the absence of catalysts to move shares. With temperatures soaring as high as 50 degrees Celsius (122 degrees Fahrenheit) in some parts of the region, traders typically leave for the summer.
Egypt’s EGX 30 Index fell 0.5 percent. Fitch Ratings affirmed the country’s B rating, five levels below investment grade. The government said last week it plans to cut fuel subsidies for a second year to help trim one of the Middle East’s highest budget deficits.
Israel’s TA-25 Index advanced 1.1 percent, the most since May 19, at the close in Tel Aviv. Delek Group Ltd. entered an accord with a subsidiary of China’s Fosun International Ltd. for the sale of its stake in Israeli insurer Phoenix Holdings Ltd., it said in an e-mailed statement. Delek climbed 1.7 percent to the highest since December 1. Phoenix advanced as much as 7.9 percent before closing 3.7% higher, its biggest gain since January 27.