World Economy

Saudi Stocks at 35-Month Low

Saudi Stocks at 35-Month LowSaudi Stocks at 35-Month Low

Saudi Arabia’s benchmark Tadawul All-Share Index tumbled to a 35-month low and Dubai and Egypt’s benchmarks hit their lowest closes of 2015 as a renewed slump in oil prices spurred a region-wide sell-off.

Saudi’s benchmark fell 2.9% to its lowest finish since Jan. 1, 2013 to take its losses this year to 17.4%.

Oil made its biggest weekly decline in eight months last week and US Light Crude fell 5.1% on Thursday and Friday alone, Arab News reported.

The sustained slump in oil prices has hurt state finances in the Persian Gulf Arab states along with earnings in the important petrochemical sector.

“Persian Gulf Arab markets have been in a bearish mode for quite a while now; Sunday’s declines were triggered by the latest drop in oil prices,” said Shakeel Sarwar, head of asset management at Securities & Investment Co. in Bahrain.

 Broad Sell-Off

“Third quarter earnings have not been helpful either,” he said, forecasting Persian Gulf Arab markets’ earnings would fall 10-15% on average in 2015 based on results for the first nine months of the year.

Saudi Basic Industries Corp. and fellow petrochemical producers Saudi Kayan each dropped 3%.

Almost all sectors declined in a broad sell-off. The banking index lost 2.7%. “Investors are now realizing oil prices won’t recover any time soon,” Sarwar said.

Construction stocks headed losers as Dubai’s index fell 3.7 to its lowest close since mid-December 2014.

Drake & Scull plunged the maximum daily limit of 10% to an all-time low after the contractor reported a third-quarter net loss of AED985 million ($268.18 million).

Builder Arabtec dropped 9.3% to take its losses to 85% from a May 2014 high, and since then several senior management staff have left. It has reported widening losses in the past four quarters including a third-quarter loss of AED944.8 million last week.

In Abu Dhabi, Etisalat dropped 1.6% as traders booked profits after MSCI said it would include the telecom operator in its emerging market index from November-end. Etisalat’s shares had gained 29% since June when the company said it would allow foreigners and institutions to own its shares, a prerequisite to join the index.

In Egypt, the main index fell 4.2% to a 23-month low as losers outnumbered gainers 26 to one.