Tadawul crashes below 6,000

Shares in Saudi Arabia fell for a fourth day led by Saudi Basic Industries Corporation and effects continue to ripple across Gulf markets.

A Saudi trader reacts as looks at the stock market monitor in Riyadh, Saudi Arabia,

Shares in Saudi Arabia fell for a fourth day led by Saudi Basic Industries Corporation (Sabic) and banks as the catastrophic effects of the global financial crisis continued to ripple across Gulf markets. The Tadawul All Share Index lost 5.9 per cent to close at 5,794.87. The index has fallen 48 per cent this year. The Tadawul All Share Bank Index fell 4.8 per cent, pushing the decline for the year to 48 per cent.

Some of the kingdom's and the region's largest companies fell dramatically yesterday. Sabic dropped 9.7 per cent on forecasts of slower growth in quarterly net income. Al-Rajhi Bank, the largest bank in the kingdom by market value, closed at its lowest level since July last year. Tabuk Cement fell 9.8 per cent on a drop in net income. "Gulf markets are getting sold down like other emerging markets, irrespective of their unique underlying fundamentals," said Ali Khan, the head of equity trading at Dubai's Arqaam Capital. "It reflects the flight of international liquidity from emerging markets."

European and Asian benchmark indexes posted their worst weekly retreats on record as exchanges in Russia, Indonesia and Ukraine suspended trading in an effort to halt a global rout that has wiped out US$25 trillion (Dh91.83 trillion) from global equities this year. Al-Rajhi Bank fell 4.4 per cent to 66 Saudi riyals (Dh64.6). Banque Saudi Fransi dropped seven per cent to 53 riyals, while Arab National Bank lost 9.9 per cent to 39.2 riyals, its lowest level since Oct 2004.

Saudi banking shares have declined on concerns that the global financial crisis will have an impact on their brokerage operations. Al-Rajhi Bank, Samba Financial Group and Riyad Bank, the three biggest lenders in Saudi Arabia by market value, said on Oct 7 that they had no exposure to international mortgage markets as the credit crisis ravaged stock markets and made banks insolvent. "People expect their fee income to take a hit because of the general downturn in the market," said Faisal Hasan, the head of research at Global Investment House in Kuwait.

Sabic, the Middle East's biggest company by market value, dropped 9.7 per cent to 81.5 riyals, giving the company a market value of 244.5bn riyals. The stock has lost 51 per cent this year. The petrochemical maker may report third quarter net income rose 6.8 per cent to 7.9bn riyals, its weakest growth in nine quarters. Tabuk Cement, a Saudi cement maker, declined 9.8 per cent to 27.5 riyals after reporting a 58 per cent drop in third quarter profit on lower sales. Net income declined to 22.9 million riyals from 54.6m riyals a year earlier, the company said in a statement on the Saudi bourse website.

On Thursday, Gulf shares rose after some of the region's central banks cut interest rates, along with the US Federal Reserve and others, to try to ease the economic effects of the worst financial crisis since the Great Depression. Oman's Muscat Securities Market 30 Index advanced 8.3 per cent, the Kuwait Stock Exchange Index climbed 3.8 per cent, and in Qatar the DSM 20 Index gained 1.9 per cent. The Dubai Financial Market General Index rose 3.7 per cent and the Abu Dhabi Securities Exchange General Index added one per cent. The Bahrain All Share Index increased 0.5 per cent.

* with Reuters