Saudi Shares Drop Most in Month as PIF Said to Study Asset Sales

  • Jabal Omar is the biggest contributor to Tadawul’s loss
  • PIF has about $100 billion worth of shares in listed firms

Saudi to Make PIF World's Biggest Fund

Saudi Arabian stocks declined the most in over a month on concern the nation’s sovereign wealth fund will sell shares of local companies.

The Tadawul All Share Index lost 2.1 percent at the close in Riyadh as 81 percent of its members retreated. Jabal Omar Development was the biggest contributor to the retreat, ending its 13 day winning streak. The Public Investment Fund -- with about $100 billion worth of shares in listed local companies -- is reviewing the stakes as it seeks to raise funds for expansion abroad, five people with knowledge of the matter said, asking not to be identified as the discussions are private.

“People don’t know at this moment how or when PIF might divest from those assets, so investors are preferring to go ahead and sell now,” said Mohammed Alsuwayed, the Riyadh-based head of capital and money markets at Adeem Capital.

Saudi Arabian stocks had been on a rally since the government raised $17.5 billion in its debut dollar bond sale last month, pushing the index into a bull market. Even with its gain this quarter, the index is down 6.1 percent this year, the most in the Middle East and North Africa, as the Saudi government cut spending and reduced bonuses to some public workers following a plunge in the price of oil, its main source of income.

Jabal Omar lost 5.2 percent, the biggest drop in six weeks. National Commercial Bank retreated 4.1 percent.

The nation is planning to expand its sovereign wealth fund into the world’s largest by transferring ownership of Saudi Aramco to the PIF and also the proceeds from the oil company’s initial public offering. The fund could eventually control more than $2 trillion, according to Deputy Crown Prince Mohammed bin Salman, and plans to increase the proportion of its foreign investments to 50 percent by 2020 from 5 percent now.

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