02/03/2011
Gulf turmoil: Tadawul hits two-year low
Political unrest in the Middle East continues to rattle the Saudi stock market
The Tadawul All-Share Index (TASI) made its largest drop in two years on Tuesday as uncertainty continues to erode the confidence of investors in the region.
The TASI closed 6.78 percent or 402.91 points down at 5,538.72 on Tuesday — its biggest drop since November 2008 to its lowest close since July 13, 2009. The market fell 5.15 percent on two previous trading days this week as it was closed on Saturday. The other Gulf markets were mixed.
Middle East markets have slid in recent weeks as uprisings unseated veteran rulers in Egypt and Tunisia. Declines steepened as unrest reached the oil-producing Gulf Arab states, with deadly protests erupting in Bahrain and Oman, Reuters said.
Saudi Basic Industries Corp. (SABIC), the Arab world's largest listed company, fell 7.8 percent and Samba Financial Group lost 8.6 percent.
The index had risen in early trade, a day after the General Organization for Social Insurance (GOSI), a quasi-state pension fund, bought petrochemical stocks, helping to stem losses, Reuters said.
Faisal Alsayrafi, managing director and CEO of the Financial Transaction House (FTH), said the fall in the stock market is because of panic selling. He advised investors not to panic as fundamentals are very strong in Saudi Arabia. He said the government funds should pump more money into the stock market to avoid volatile trading and stabilize the market.
“The fall in stock prices has created an opportunity to enter into the market in a big way as the market will rebound once the situation in the region becomes normal,” he said.
The National Commercial Bank (NCB) said in its weekly report “Bahrain's turmoil is uncomforting for investors as the protest virus has proven to be very contagious.”
The sector activity for the day was negative. The losing sectors ranged from 4.32 percent by the Cement sector to 9.50 percent by the Multi-Investment sector. The overall market breadth for the day was negative with 0 advancers against 145 decliners giving it an AD ratio of 0, the FTH said in its daily commentary.
The Saudi stock market turnover for the day reached SR5.11 billion. According to Tadawul’s monthly report, total equity market capitalization at the end of February dropped 6.44 percent to SR1.19 trillion ($318.42 billion).
The total value of shares traded in February reached SR67.62 billion ($18.03 billion), decreasing by 19.32 percent over the previous month.
The Dubai and Qatar indexes halted declines, but gave back most of their early gains as Saudi stocks fell.
The Kuwaiti index fell 2.5 percent to 6,321 points, as the Omani index climbed 4.1 percent to 6,401 points. The Bahraini index dropped 0.5 percent to 1,424 points.
