Saudi stocks back in grip of bears
dubai — This is shaping up to be the worst year for Saudi stocks since the financial crisis.
The benchmark equity gauge declined as much as 2.2 per cent on Monday, moving deeper into its second bear market of the year and extending the worst selloff in the six-nation GCC. The Tadawul All Share Index, which fell to the lowest level since 2011 on Sunday, has lost about $30 billion since the nation last week announced a series of cuts to government salaries and bonuses as part of effort to slash spending.
The central bank on Sunday directed local lenders to reschedule the consumer loans of clients affected by last week’s decision to scrap the bonuses and allowances of many state employees. Saudi stocks are on course for their worst year since 2008 as the government
Clearly the sentiment is deteriorating, with the vast majority of traders still digesting the consequences of the austerity measures announced last week Mohammed Al Omran, CEO, Amac Investments
grapples with a budget shortfall that ballooned to the widest in more than two decades last year amid the slump in oil prices.
“Clearly the sentiment is deteriorating, with the vast majority of traders still digesting the consequences of the austerity measures announced last week,” said Mohammed Al Omran, the chief executive officer of Riyadh-based Amac Investments and president of the Gulf Center for Financial Consultancy.
“They will have a direct impact on growth prospects for companies, and we see a continuation of that pessimism impacting stock prices. It is hard to tell at this moment when sentiment will improve again.”
The Tadawul declined 0.1 per cent as of 1:51pm in Riyadh. Jabal Omar Development Co was the biggest contributor to the slide, falling 4.1 per cent, followed by Saudi Telecom Co’s 2.9 per cent drop.
The Saudi Arabian Monetary Agency, as the kingdom’s central bank is known, said in a statement late on Sunday that directing local banks to reschedule loans was part of efforts to “reduce pressure on borrowers” whose income was cut by the spending cuts announced last week.