Tadawul falls to lowest level since October last year

Saudi Arabia's Tadawul All Share Index fell 3.28 per cent to 8,173.97 points yesterday on thin trading.

The index was led lower by Samba Financial Group and Saudi Basic Industries Corp, that saw the petrochemicals giant made one of the biggest losers on the day.

Shares in Sabic were down 3.24 per cent at SR119.25 ($31.8), according to the Saudi Arabian Tadawul Stock Exchange website. The Tadawul index, which has dropped 26 per cent this year, fell to its lowest level since October last year.

Demand for plastics and petrochemicals may decline amid growing fears the world is slipping into a recession led by a downturn in the US and Europe. Sabic is the world's largest traded petrochemicals maker and one of the most exposed stocks in the Gulf to a potential global downturn.

Thin trading on Tadawul as the summer business lull in the Gulf takes hold ahead of shorter Ramadan trading hours also contributed to the market's poor day, traders say.

"Tadawul is down because it's summertime and Ramadan is also approaching so the volumes being traded are thin and any movement or selling is magnified," says Natheer Al Mahdi, head of local portfolios at Riyad Bank.

Mohamed Abdel Samie, Rana Investments' senior investment analyst, said Sabic shares dropped because investors liquidated fund exposures.

"Some mutual fund might be liquidating part of their assets due to retail redemption," Abdel Samie said, adding Sabic shares usually make up a large holding of these portfolios.

The Saudi index has declined because of "amplified fears" about the global economy and tension between Iran and the West, Bakheet Investment Group said in a weekly stock market report on its website.