Saudi stocks plunge on global sell-off, oil price drop

Saudi shares plunged on Thursday, dragged by a sell-off across global markets, following a Chinese market shutdown and further weaknesses in crude oil prices.

The Tadawul All Share Index (TASI) closed 4.5 percent lower at 6,225, near a four-year low. Over the past four sessions, the index has dropped over 10 percent.

Turnover was relatively robust at SAR 5.4 billion, indicating a strong selling wave spread across all sectors. The advance/decline ratio was 4/162.

“The fourth quarter corporate results are being overshadowed by the low oil prices, the political instability, and of course, the global market turmoil on China fears,” Fadhel Makhlooq, head of brokerage at Bahrain-based SICO told Argaam.

Even if financial results are good—and that is not expected— the market isn’t going to turn around, he added.

“It will take stability in the oil markets and for the global macroeconomic indicators to improve before investor confidence is restored,” Makhlooq said.

Meanwhile, Saudi Arabia’s Purchasing Managers' Index showed that growth in the non-oil private sector fell to 54.4 points in December, its lowest since August 2009, according to an Emirates NBD survey.

At a stock level, the biggest losers included index heavyweight SABIC, down 3.2 percent; and Al Rajhi Bank, down 4.7 percent.  

Oil shipper Bahri fell seven percent to SAR 42.60.

Meanwhile, Maaden was 6.7 percent lower at SAR 29.30, as China is a key market for the Gulf’s largest miner.

Advanced Petrochemicals was among the few stocks that made gains today, rising 1.9 percent to SAR 33. The polypropylene maker’s CEO said the company would maintain dividend payout at SAR 3 per share, if not more.

Earlier on Thursday, Brent crude futures tumbled $2 to below $33 per barrel earlier, mainly due to the depreciation of the Chinese yuan and a buildup in U.S. stockpiles. Though the benchmark later recovered slightly and is now trading at $33.12, the outlook for the commodity is staunchly bearish.

Write to Brinda Darasha at brinda.d@argaamplus.com