Saudi Shares Drop 2% On Global Fears

Saudi Arabian shares dropped nearly two per cent yesterday to a three-month low, weighed by declines in the heavyweight banking and petrochemical sectors, after a fall in oil prices and global stocks.

The all-share index closed 1.9 per cent lower at 6,966 points, 8.6 per cent higher than at the start of the year but a 12 per cent drop from a 44-month high hit on April 3.

It is the index’s lowest closing level since 20th February.

“What we’re seeing is a reaction to the global market. All eyes on Monday will be watching how early trades deal with Greece and the euro zone crisis,” says Hisham Tuffaha, asset manager at Bakheet Investment Group.

World stocks suffered on Friday as investors fled risky investments for safe-haven assets amid growing concerns over the debt crisis afflicting Greece and other euro zone economies.

Share movements in the world’s top oil exporter are also heavily influenced by crude prices, which dropped to a 2012 low on Friday as Europe’s economic woes threatened to undercut demand.

The banks and financial services index dropped 2.1 and the petrochemical index fell two per cent.

The bellwether Saudi Basic Industries Corp (SABIC) lost 1.8 per cent and Al Rajhi Bank, Saudi Arabia’s largest lender, dropped 3 per cent.

At the start of the day, Saudi Arabia’s bourse opened lower, with petrochemical and banking stocks weighing after a fall in oil prices and declines in global stock markets.

Oil prices fell on Friday in tug-of-war trading, posting a 2012 low and a third straight weekly loss as debt problems in Greece and Spain kept concerns about the euro zone economy in focus.

World stocks erased the year’s gains on Friday as investors fled risky investments for safe-haven assets on concerns about the euro zone’s deepening debt woes, while U.S. stocks lost ground after the debut of Facebook failed to ignite optimism.