Saudi Arabian Shares Drop Most in 10 Months After Oil Tumbles
Shares in Saudi Arabia, OPEC’s biggest oil producer, slumped the most in 10 months after crude fell to the lowest since October as employment reports in the U.S. and Europe signalled fuel demand may tumble.
Al Rajhi Bank (RJHI), the kingdom’s largest bank by market value, retreated to the lowest since January and Saudi Basic Industries Corp. (SABIC), the world’s biggest petrochemical maker known as Sabic, slid 3.7 percent. The Tadawul All Share Index (SASEIDX) tumbled 4.2 percent, the biggest drop since Aug. 6, to 6,681.18 at the close in Riyadh. The measure lost 7.7 percent in May, the biggest monthly decline in two years.
Oil dropped 3.8 percent to $83.23 a barrel in New York after the Labor Department said American employers added the fewest workers in a year in May. Oil prices are down 24 percent from this year’s closing high in February. Brent dropped below $100 for the first time since October. Gulf Arab oil exporters, including the Saudi Arabia and the United Arab Emirates, supply about a fifth of the world’s oil.
“Oil prices are down to low levels and this is one of the reasons why the market is down,” said Riyadh-based Turki Fadaak, head of research at Albilad Investment Co. “The global economic reports and Europe’s debt problems are also pressuring the market, but this is more of a psychological pressure than anything else, because the link between the Saudi economy and Europe are weak.”
The jobless rate in the euro region, which has been in the grips of a debt crisis for three years, reached a record high, of 11 percent in April and March. European stocks declined for the fourth week in five and U.S. shares tumbled, erasing the Dow Jones Industrial Average’s 2012 gain.
Al Rajhi declined 3.1 percent to 70.50 riyals, the lowest level since Jan. 4. Sabic fell to 90 riyals, the lowest close since Nov. 27.
Saudi Arabia’s stock exchange is the only Persian Gulf bourse operating on Saturdays.
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