Saudi Stocks Decline Most Since May as Egyptians Defy Curfew

Saudi Arabian shares retreated the most since May on concern political unrest could spread in the Middle East after Egyptian protesters clashed with police and the North African country’s president refused to resign.

The Tadawul All Share Index tumbled 6.4 percent, the most since May 25, to 6,267.22 at the 3:30 p.m. close in Riyadh. All but one of the 146 shares fell. Saudi Basic Industries Corp., the world’s largest petrochemical maker, slumped 7.5 percent. Savola Azizia United Co., a food producer with subsidiaries in Egypt, dropped 10 percent, the maximum fluctuation allowed in a single trading session.

“There is a lot of worry looming among investors that we’re going to see a domino effect across the region,” said Amro Halwani, a trader at Shuaa Capital PSC in Riyadh. “That is pushing investors away from equities and straight into cash. It is panic selling across the board.”

Stocks worldwide plunged the most since November, with the MSCI World Index declining 1.4 percent yesterday, and crude oil posted the biggest jump since 2009 after protesters posed the biggest challenge to Egyptian President Hosni Mubarak’s 30-year rule. Egyptian stocks on Jan. 27 tumbled the most in more than two years, with the EGX30 Index plunging 11 percent. The Egyptian bourse and banks will be closed tomorrow due to the unrest in the country, Egypt’s state TV said today.

The cost of protecting Saudi Arabian debt against default for five years soared the most in more than two years yesterday.

New Government

Egyptian President Hosni Mubarak yesterday rejected calls from protesters to resign and said he would name a new government to promote democracy as protesters defied a curfew, set buildings on fire and swarmed armored cars. Mubarak imposed the curfew after tens of thousands of marchers chanted “liberty” and “change.”

Demonstrations began in Egypt on Jan. 25, inspired by an uprising that ousted Tunisian President Zine El Abidine Ben Ali on Jan. 14. Anger has also erupted in recent months in Yemen, which boarders Saudi Arabia in the south, and Algeria. Like Egypt, both countries face spiraling food prices.

“Investors hate uncertainty and Egypt just gave them a big dose of it,” Shuaa Capital’s Halwani said.

Saudi Basic, also known as Sabic, retreated 7.5 percent to 98.25 riyals. Al Rajhi Bank, Saudi Arabia’s largest publicly traded lender, dropped 2.1 percent to 80 riyals, the steepest decline since June. Etihad Etisalat Co., the second-largest phone company by market value, fell 7.1 percent to 52 riyals, the lowest price since August.

Trading Volume

Savola, whose Egyptian units include Afia International Co. Egypt and United Sugar Co. Egypt, fell the most in two years to 27 riyals. Halwani Bros. Co., a Saudi food processing company, tumbled 10 percent to 36 riyals. Egypt represented 32 percent of the Jeddah-based company’s revenues in 2009.

“The market will probably remain negative until a clearer picture evolves,” said Fuad Aghabi, investment director at Ajeej Capital in Riyadh.

The volume of shares traded on Tadawul was 264.6 million, the highest since June. This compared with last year’s daily average of 139 million shares. “Foreigners were one of the biggest sellers today,” said Shuaa’s Halwani.

Saudi Arabian credit default swaps jumped 46 basis points, the biggest increase since September 2008, to 110 yesterday, according to CMA prices.

Credit-default swaps conceived to protect bondholders against default pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Saudi Arabia’s stock exchange is the only Gulf Arab bourse open on Saturdays.