Bloomberg

By Mourad Haroutunian

Saudi Arabian shares declined for a fifth day, led by banks and petrochemicals companies after U.S. and European markets retreated this week on concern the global economic recovery is slowing.

Riyad Bank, Saudi Arabia’s third-largest lender by market value, led the retreat, followed by Al-Rajhi Bank and National Industrialization Company, the petrochemical maker known as Tasnee. The 143-company Tadawul All Share Index lost 1.1 percent to 6,122.34, the lowest since July 21, at the close in Riyadh.

“The market is correcting due to a global downward trend on mounting concerns about the state of the global economy,” said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.

European and U.S. stocks fell this week after the Federal Reserve said the pace of economic recovery is likely to be “more modest” than forecast. The Stoxx 600 fell 1.2 percent, paring last week’s 1.3 percent rally. The S&P 500 tumbled 3.8 percent this week to the lowest level since July 21. The Dow Jones Industrial Average decreased 3.3 percent.

The MSCI Emerging Markets Index, which tracks developing- nation equities, slid 3 percent this week, the first drop in four weeks.

Crude oil settled at $75.39 a barrel on the New York Mercantile Exchange yesterday, the lowest price since July 12. Futures fell 6.6 percent this week. Saudi Arabia holds one-fifth of the world’s proven oil reserves.

Riyad, Rajhi

Riyad tumbled 3.6 percent, the most since June 1, to 26.6 riyals. Rajhi decreased 1 percent to 76.5, the lowest since July 25. Tasnee dropped 2.2 percent, the most in a month, to 27.2 riyals. Saudi Basic Industries Corp., the world’s largest petrochemicals maker known as Sabic, retreated 0.3 percent to 85.75 riyals, the lowest since July 20.

Trading volumes on the fourth day of Ramadan, the Islamic holy month when Muslims fast from sunrise to sunset and business slows, were higher than the daily average.

“Ramadan traditionally pushes equities down,” said Sfakianakis. “Price opportunities created today prompted some investors to buy.”

About 222 million shares traded, compared with this year’s daily average of 147 million.

Saudi Arabia’s index is the only Gulf Arab benchmark tracked by Bloomberg that trades on a Saturday.

http://www.bloomberg.com/news/2010-08-14/saudi-arabian-stocks-drop-for-fifth-day-on-concern-global-recovery-slowing.html