Dubai: Saudi Arabian stocks fell early on Wednesday as oil prices weakened and Salama Cooperative Insurance plunged in response to a rights issue.
Brent crude slipped more than 1 per cent to around $62.60 a barrel on Wednesday morning after Greece defaulted on its debt and data showed both US and Opec oil production had hit records.
This ended Tuesday’s round of buying by retail investors.
The Saudi stock index dropped 0.4 per cent as petrochemical producer Saudi Basic Industries lost 1.2 per cent.
Salama tumbled 35 per cent to 19.10 riyals after announcing plans for a rights issue between July 1 and 28; shareholders will be entitled to buy 1.5 new shares for every share held, at a price of 10 riyals.
However Saudi Ground Services, which listed last Thursday after an initial public offer at a price of 50 riyals per share, surged a further 4.5 per cent to 76.25 riyals and was once more the most heavily traded stock.
It is now starting to pass levels which analysts see as fair value; SICO, for example, has a target price of 74 riyals.
Telecommunications operator Zain KSA added 2.6 per cent. It has been strong since Sunday, when rival Etihad Etisalat (Mobily), whose shares remain suspended, said it had decided to increase provisions for “Zain account receivables” by 800 million riyals ($213 million).
Mobily is embroiled in a 2.2 billion-riyal dispute with Zain Saudi over the application of a 2008 contract under which Mobily would provide domestic roaming and site sharing services to its rival. Its decision to take provisions over the dispute could indicate a positive outcome for Zain.
