Saudi stocks fall as oil prices hit six-month lows
Saudi Arabia's stock market fell in early trade while Egypt's bourse rose
Saudi Arabia's stock market fell sharply by mid-afternoon on Sunday after oil prices hit six-month lows and several companies posted disappointing earnings.
The benchmark dropped 3.2 percent to 8,808 points, its lowest since early April, with nearly all stocks in the red. It has no significant technical support left above the April low of 8,502 points.
Heavyweight petrochemicals giant Saudi Basic Industries tumbled 5.2 percent. The company's profits have been hurt by the drop in oil prices over the last 12 months, and the commodity's fresh weakness is a concern for investors.
U.S. crude posted its biggest monthly drop - 21 percent - since the 2008 financial crisis on Friday after a string of losses in July triggered by China's stock market slump and signs that top Middle East producers were pumping crude at record levels. Brent lost 5 percent on the week and 18 percent on the month.
Other companies in the petrochemicals industry also fell sharply, and the sector's index was down 5.0 percent.
Red Sea Housing Services tumbled its daily 10 percent limit after its second-quarter profit dropped 58 percent on lower sales and margins and the firm announced delays in the implementation of some projects.
Mediterranean and Gulf Insurance & Reinsurance Co was also down 10 percent after swinging to a loss in the second quarter, which it blamed on higher claims.
In the latest monthly Reuters survey of leading Middle East fund managers, published on Thursday, 40 percent said they expected to cut equity allocations to Saudi Arabia in the next three months and just 7 percent to increase them. That compared with 27 percent intending to decrease allocations and 13 percent to increase them in the June survey.
With the exception of Turkey, Saudi Arabia was seen as the most negative major Middle Eastern equities market, because of high valuations and the heavy weighting of petrochemicals in the market.