Saudi Shares Dips To Two-Month Low On Oil, Europe Debt Concern

Saudi Arabia’s shares slumped for a second day after oil dropped to a 2012 low on concern that Europe’s debt crisis will worsen and after China’s industrial growth unexpectedly slowed in April.

Saudi Basic Industries Corp. (SABIC:AB), the world’s largest petrochemicals maker known as Sabic, fell 2 percent. Al-Rajhi Bank (RJHI), the country’s largest lender by market value, declined to the lowest intraday level since February.

The Tadawul All Share Index or TASI (SASEIDX) lost 2.3 percent to 7,059.1 at 11:58 a.m. in Riyadh, the lowest since Feb. 25. The MSCI Emerging Markets Index (MXEF) yesterday retreated 1 percent.

“The drop is definitely headline driven, as we’ve seen a correction in oil prices, and on top of that, there are resurfacing concerns about the Eurozone debt crisis,” said Asim Bukhtiar, an equity analyst at Riyad Capital. “The correlation between Saudi’s market and international markets is tightening. I expect the performance of the measure in the coming days to reflect what’s happening internationally.”

Global equities declined last week as an inconclusive election in Greece left political parties struggling to form a government. The impasse reignited concern over Greece’s ability to meet terms of its two bailouts and the possibility the country will leave the euro. U.S. stocks also tumbled in the period, with the Standard & Poor’s 500 Index slumping 1.2 percent after U.S. banks sank following JPMorgan Chase & Co.’s $2 billion trading loss.

Crude for June delivery fell 2.4 percent last week to $96.13 a barrel on the New York Mercantile Exchange. Saudi Arabia (SABIC), the world’s biggest oil exporter, derives more than 90 percent of public revenue from oil exports.

Sabic decreased to 97 riyals ($25.87), headed for the lowest close since Feb. 20. Al-Rajhi Bank dropped 2.3 percent to 73.75 riyals ($19.67), the lowest since Feb. 20.

Saudi Arabia’s stock exchange is the only Gulf Arab bourse that is open on Saturdays.