Saudi Arabian Shares Drop to January 2004 Low; Sabic Falls

By Fiona MacDonald

Nov. 22 (Bloomberg) -- Saudi Arabian shares dropped to the lowest in almost five years as Saudi Basic Industries Corp. extended the shutdown of a plant in Europe and on concern the global economic slowdown will impact growth in the kingdom.

Saudi Basic, or Sabic, dropped to the lowest since June 2004. Al-Rajhi Bank, the country’s largest bank by market value, declined for a fourth day and Etihad Etislat Co. retreated the most since October. The shares of all three companies lost almost 10 percent.

The Tadawul All Share Index plunged 9.2 percent, the most since Oct. 6, to 4,431.57 at the close in Riyadh. The measure closed at its lowest since January 2004. Of the stocks in the index, 122 fell, one rose and two were unchanged.

“Investors are panicking due to the global crisis,” Abdulla al-Aqil, a trader at Samba Financial Group, said in a phone interview from Riyadh.

European stocks had their second-worst week this year as concern deepened that a worsening economy is stifling profits. Citigroup Inc. will probably get rescued by the U.S. government after a crisis in confidence erased half its stock-market value in three days, investors and analysts said. General Motors Corp. said it will idle production for an additional week at four plants, extend the closing of an engineering center and return some corporate jets, as the company seeks U.S. aid to avoid running out of cash.

Supply and Demand

“What’s happening with Citigroup and GM, all global news, is having a major impact on our local market,” al-Aqil said.

Sabic tumbled 9.9 percent to 44.6 riyals. The world’s biggest chemicals maker by market value said a naphtha cracker at its Geleen plant in the Netherlands will have an extended shutdown after a fault earlier this week.

“The cracker won’t be started up before the balance between supply and demand is better again,” Susan Haenraets, a Sabic spokeswoman, said Nov. 21.

Naphtha crackers are used in the production of ethylene and propylene, used in plastics including carrier bags and water bottles. Weak demand for naphtha-based products as consumers cut spending has led other chemicals makers to reduce output. BASF SE said Nov. 19 it was temporarily shutting 80 plants and cutting output at 100, while Ineos Group Holdings Plc said Nov. 17 it had reduced production by 20 to 25 percent at its plants.

Al-Rajhi Bank fell 9.9 percent to 50 riyals. Etihad Etisalat, the second-largest mobile-phone service provider in the kingdom, dropped 9.9 percent to 24.15 riyals. Kingdom Holding Co., which holds part of Prince Alwaleed bin Talal’s stake in Citigroup, dropped 9.7 to 4.2 riyals.

“Investors are awaiting new incentives to enhance market confidence and inject liquidity,” Bakheet Group wrote in its weekly report on Nov. 19. They are focusing on full-year earnings “to revaluate the global crisis’s impact on Saudi companies’ outlook.”

The Saudi bourse is the only Arab exchange monitored by Bloomberg that is open on Saturdays.

To contact the reporter on this story: Fiona MacDonald in Kuwait FmacDonald4@bloomberg.net