Saudi Arabia’s stock exchange took a large hit Saturday, its benchmark index dipping a whopping 5.46 per cent on the back of growing concerns about the world economy after Standard and Poor’s cut the United States credit rating.
On Friday, the United States lost its top-tier AAA credit rating from Standard & Poor's for the first time in history, throwing a heavy shadow on the Saudi exchange, which on Saturday tumbled for the third consecutive day.
Tadawul All Share Index (TASI) lost 350 points to reach 6,073 points, its lowest level since March. All sectors finished in red, almost all stocks seeing slumps.
Bloomberg quoted Fuad Aghabi, a director at Ajeej Capital in Riyadh, explaining the drop as a combination between equity markets plunges over the Saudi weekend as well as the downgrade by S&P.
Sectors directly connected to global industries and markets witnessed very sharp declines.
Petrochemicals sectors, the second largest in the exchange, slumped by 446 points (6.66 per cent) on fears of declines of global demand as the world economy stumbles.
Saudi Basic Industries Corp (sabic), the world’s biggest petrochemicals maker, lost 5.78 per cent to close at 97.75 riyals. Rabigh Refining and Petrochemicals Co. dropped 9.9 per cent to close at 22.6 riyals.
The Banking and Financial sector also lost 721 points (4.74 per cent), whereas Al Rajhi Bank per cent and Samba Financial Group lost 6.98 per cent and 5.21 per cent, respectively.
Among the stocks that dropped by more than 9 per cent today are Tabuk Agriculture, Allianz, BURUJ and Saudi Arabia Refineries.
The only share to finish in green in today’s session was Tihama Advertising & Public Relations Co., closing on a meagre 0.25 per cent growth.