Saudi falls below 7,000; oil drop weighs
Riyadh, September 24, 2012
Saudi Arabia's bourse headed for its sixth straight loss, breaking below the psychologically important 7,000 level following a further drop in oil prices.
The kingdom's index slipped 1.3 percent to 6,941 points, down 3.1 percent since September 15's four-month high.
The heavyweight petrochemical and banking sectors head declined. Saudi Basic Industries Corp (Sabic), the world's largest chemicals producer, shed 1.4 percent. Saudi Kayan Petrochemical dropped 2.2 percent and Al-Rajhi Bank fell 1 percent.
"Today's sell-off is in line with what's happening in US markets - you've (also) seen oil prices come off and some of this selling is in reaction to that," says Asim Bukhtiar, head of research at Riyad Capital. "Sentiment is weak on petrochemical stocks for Q3. Banks are expected to do well but there will be some moderation in lending in H2. Some of that started to show in provisioning in Q2."
Saudi earnings season will start around the second week of October and some analysts expect the petrochemical sector profit to decline by 30 percent, hit by weak global demand.
Oil was trading at $91.56 a barrel at 0902 GMT, down 7.5 percent since Sept. 14's four-month high, with the latest drop attributed to a firm dollar and worries about weak economic growth in key consumer nations.
European shares and the euro are down on Monday as investors refocus attention from central bank stimulus schemes to weak economic fundamentals and the euro zone's yet-to-be-resolved debt crisis.
Dubai's bourse also fell for a third session and technical indicators pointed to further declines, while Qatar's market steadied after a two-day correction.
Dubai's index declined 0.3 percent to 1,588 points, heading for its third decline since Wednesday's 20-week high.
In Qatar, the benchmark climbed 0.1 percent to 8,578 points, stalling a two-session decline. - Reuters