Dubai: The sell-off in Saudi stocks continued on Wednesday.
The drop extended a slump that started on Tuesday after the government announced cuts in government salaries. It continued on Wednesday following OPEC’s failure to produce a deal in Algiers to cap oil production.
The Tadawul All share index fell as much as 5 per cent before closing 3.42 per cent lower at 5,534.43, after losing 4 per cent in the previous session.
“I’m surprised with the fall in Saudi stocks. I think it has gone too far and the slump is overdone,” Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s asset management group, adding, “This slump should have stopped already.”
Alinma Bank closed 7.49 per cent lower at 11 Saudi riyals, while Saudi Kayan Petrochemicals closed 5.45 per cent lower at 5.20 Saudi riyals. Out of a total of 166 stocks traded on the exchange, shares of 163 firms fell, while 3 rose.
Valuations
“The valuations even in low-growth environment are pretty good, and I don’t think we deserve this kind of punishment that we are seeing,” Khokhar said, adding, “value is there, but it’s a momentum market driven by retail investors and, if the markets are spooked, they don’t really look for valuations.”
The benchmark Tadawul index has shed nearly 9 per cent in the past two sessions, taking the losses to 20 per cent so far in the year.
