Saudi Stocks Cap Worst Month in 7 Years as Oil Slips

Saudi Arabian stocks fell in the worst month in almost seven years after Brent crude resumed its decline.

The Tadawul All Share Index fell 2.2 percent on Monday, the most among the Middle East’s major equity gauges, to 7,522.47. That extends the Tadawul’s drop to 17 percent in August, the most in a month since October 2008, according to data compiled by Bloomberg. Brent, the benchmark for half the world’s oil, headed for its fourth monthly decline.

Tadawul vs. Brent Crude
Tadawul vs. Brent Crude

Saudi Arabia’s index is the worst-performing in the world this month after the Athens Stock Exchange General Index, following a slump in the price of oil, which accounts for about 90 percent of the country’s income. The government is already reviewing capital spending plans for next year, and may delay or downsize some infrastructure projects to save money, according to two people familiar with the matter.

“A cloudy fiscal policy along with unattractive economic data and oil prices continuing to decline fueled negative sentiment about the market which exaggerated fears among investors,” said Mohammed Al-Suwayed, the Riyadh-based head of capital and money markets at Adeem Capital. “There hasn’t been any official statement from King Salman on his fiscal policy or its direction, but all indications point toward a possible contractionary fiscal policy.”

Net foreign assets held by the Saudi Arabian Monetary Agency totaled $661 billion in July, a decline of $76 billion since the all-time high last August. The value of Saudi petroleum exports in the second-quarter fell 42 percent from a year earlier, the Central Department of Statistics and Information said.

Brent fell as much as 3.1 percent to $48.50 a barrel.

The Tadawul entered its second bear market in less than a year last week.

World Stock Index Returns in August as of 12:54pm in Riyadh
World Stock Index Returns in August as of 12:54pm in Riyadh
(Corrects to clarify reference in 5th paragraph is to petroleum exports.)
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