Saudi Arabian stocks fell more than any other market in the world as the kingdom announced fresh measures to narrow the budget gap.
Not a single stock rose on the Tadawul All Share Index, which retreated 3.5 percent as of 2:14 p.m. in Riyadh, the most since January on a closing basis. The hotel and media indexes were the biggest decliners on a percentage basis, while Al Rajhi Bank was the largest contributor to the main gauge’s loss.
The following are some of the key highlights of the Saudi market on Tuesday:
- The Tadawul All Share Hotel & Tourism Industries Index and the Tadawul All Share Media & Publishing Industries Index tumble 8.9 percent and 7.4 percent, respectively
- All but six of the Tadawul’s 174 members fell
- Saudi stocks led a decline in Bloomberg’s GCC 200 Index, which dropped 1.4 percent
The world’s biggest oil exporter curbed state employees’ allowances and canceled bonus payments, the official Saudi Press Agency reported on Monday. It also reduced ministers’ salaries by 20 percent and that of members of the Shura Council, which advises the monarchy, by 15 percent.
“Government pay was sacred during the previous decades,” said Mohammed Alsuwayed, the Riyadh-based head of capital and money markets at Adeem Capital. “This move shows how serious the government is” about implementing its austerity plan, he said.
The measures are part of the nation’s plan to tame a budget deficit that swelled to about 15 percent of gross domestic product last year, the widest since 1991, according to central bank data compiled by Bloomberg. The kingdom, which is diversifying its economy away from crude, allowed foreigners direct access to its stock market for the first time in 2015, and relaxed the rules further this month in a bid to lure investors. Still, the index is headed for its third-straight monthly loss and is the worst performer across the Middle East and North Africa this year.
Worst Performer
The Tadawul has lost 17 percent in 2016, compared with a 5.8 percent retreat for the GCC 200 Index, a measure of the largest and most liquid companies in the six-nation Gulf Cooperation Council. The Saudi measure’s drop on Tuesday is the biggest among more than 90 of the world’s most liquid gauges tracked by Bloomberg.
Al Rajhi Bank lost 2.8 percent, poised for the steepest decline since April. Jabal Omar Development Co. retreated 2.1 percent, bringing its losing streak to seven days, the longest since June 2015.
The Saudi government has taken measures to cope with oil prices that have lingered below $50 a barrel for most of 2016. The kingdom this year delayed payments owed to contractors and started cutting fuel subsidies. The Saudi Arabian Monetary Agency, as the local central bank is known, announced this week it was stepping up efforts to support local lenders by giving banks about 20 billion riyals ($5.3 billion) in the form of time deposits “on behalf of government entities.”
To contact the reporters on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net, Balquees Basalom in Dubai at bbasalom@bloomberg.net. To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Dana El Baltaji
©2016 Bloomberg L.P.
