Saudi Shares Drop on Oil Output Bets; Abu Dhabi Stocks Retreat

Saudi Arabian stocks fell to the lowest level since March on speculation that OPEC’s biggest producer won’t cut production to bolster the price of oil. Shares in Abu Dhabi also declined.

The Tadawul All Share Index lost 1.8 percent to 9,234.03 in Riyadh. Saudi Basic Industries Corp. slipped 4.3 percent in a second day of declines. Abu Dhabi’s ADX General Index dropped 2.1 percent.

Members of the Organization of Petroleum Exporting Countries will meet this week to decide on a response to a price collapse that sent oil into a bear market. Brent crude, the benchmark for more than half the world’s oil, lost 0.5 percent this week to $79.92 a barrel at 1:37 p.m. in London, near a four-year low. If the market is oversupplied, it isn’t the first time, Saudi Arabia’s Oil Minister Ali Al-Naimi said in Vienna yesterday.

“What investors today are afraid of is that Saudi in reality may not cut down on oil quantities produced,” Yazan Abdeen, lead fund manager at Jeddah-based Sedco Capital, said by phone today. “This is being reflected in the price drop of some of the petrochemical stocks as well.”

Saudi Arabia needs oil to average $99.2 a barrel this year to balance its budget, according to Deutsche Bank AG. OPEC is considering exempting Iraq, Iran and Libya from any potential oil-production cuts, two people with knowledge of the proposal said.

MSCI Adjustment

In the United Arab Emirates, National Bank of Abu Dhabi PJSC dropped the most in almost five years, retreating 6.8 percent to 13 dirhams.

Dubai’s DFM General Index fell 1.5 percent led by Dubai Islamic Bank PJSC. Qatar’s QE Index slid the most in almost three weeks, declining 1.9 percent.

MSCI, whose gauges are tracked by investors managing about $9 trillion in assets, said in April it would cut the weighting of some of the U.A.E. and Qatar stocks in its Emerging Markets Index by a factor of 0.5 because of ownership restrictions. In its latest review, MSCI removed the adjustment for some companies, and the new weightings were effective today.

“Foreign investors were building positions for a month for this event with the expectation that on the day the inflows would push the market higher both in the U.A.E. and Qatar,” Ahmed Shehada, head of advisory and institutions at NBAD Securities LLC in Abu Dhabi, said by e-mail. “From the looks of it, the market had sellers, both local and foreign, and the oversupply meant that the selling outweighed the MSCI inflows.”

In Oman, the MSM 30 Index declined 1.6 percent, the most in more than a month. Al Maha Ceramics Co. said the government plans to raise the sale price of natural gas. It received a letter from the Public Establishment for Industrial Estates in Sohar dated Nov. 24 citing a decision by the Financial Affairs Council to raise natural gas prices to 41 baisa per standard cubic meter from 20.5 baisa effective Jan. 1.

Kuwait’s SE Price Index and Bahrain’s benchmark BB All Share Index each slipped 0.3 percent.

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