- Company shares drop to lowest level since April 2013
- Iran accounts for 11 percent of Savola's total revenue
The Savola Group is paying the biggest price among Saudi stocks for the deepening diplomatic spat between the governments in Riyadh and Tehran.
Shares of the Jeddah-based food producer, which counts Iran among its markets, sank 9.8 percent, the most since March, to 43.70 riyals on Tuesday, the lowest level since April 2013, wiping 3.5 billion riyals ($933 million) off its market capitalization in three days. The stock was the biggest contributor to losses on the Tadawul All Share Index, which dropped 0.7 percent.
Traders exchanged about 2.7 million shares, almost nine times the three-month daily average.
Revenue From Iran
Revenue from Savola’s operations in Iran accounted for about 11 percent of the company’s income in the third quarter, according to data compiled by Bloomberg. Tension between the two countries flared after mainly-Sunni Saudi Arabia executed 47 people it accused of terrorism-related offenses, including a Shiite cleric. The desert kingdom cut diplomatic ties with Iran after protesters broke into the Saudi embassy in Tehran. Several other Arab nations have followed suit in the past three days.
“Investors are concerned the revenue might be affected by the deterioration of relations between Iran and Saudi Arabia,” said Mohammed Alsuwayed, the head of capital and money markets at Adeem Capital in Riyadh. “They’re also concerned about the company’s investments in Iran.”