Saudi shares drop moderately after oil tumbles

Saudi Arabia’s stock market fell moderately in early trade on Monday after oil producers meeting in Doha on Sunday caused crude prices to tumble, although some stocks rose on the back of better-than-expected earnings. Brent futures are trading at US$41.15 per barrel, down 4.6 per cent from their last settlement. The failure of the Doha […]

Saudi Arabia’s stock market fell moderately in early trade on Monday after oil producers meeting in Doha on Sunday caused crude prices to tumble, although some stocks rose on the back of better-than-expected earnings.

Brent futures are trading at US$41.15 per barrel, down 4.6 per cent from their last settlement.

The failure of the Doha meeting to agree on an oil output freeze may not make a huge difference to prices in the long term – analysts thought a freeze would have had only a minor impact on market conditions.

But the talks’ failure dealt a blow to sentiment in the oil market, with which Gulf bourses have been closely correlated over the past six months.

The Saudi stock index was down 1.3 per cent after 45 minutes of trade. Shares in petrochemical producers were particularly hard hit, with the sector’s sub-index shedding 2.2 per cent.

The second largest listed producer, Saudi Arabia Fertilisers Co, slumped 4.6 per cent after the company reported a 51.5 per cent decline in net profit to 286 million Saudi riyals.

Analysts had expected the unit of Saudi Basic Industries to make 314.6m riyals. A note by Riyadh-based NCB Capital said it was the lowest quarterly result since 2006, citing a decline in urea prices, a hike in natural gas feedstock prices and lower-than-expected operating rates.

But shares in fellow petrochemical producer National Industrialisation Co rose 2.0 per cent after the company posted a narrower first-quarter net loss of 94.8m riyals compared to a loss of 332.5m riyals in the prior-year period, beating analysts’ forecasts of a 272.9m riyal loss.

Another commodity producer, Saudi Arabian Mining Co (Ma’aden), climbed 2.1 per cent after it reported a 35.3 per cent fall in first-quarter net profit to 168.9m riyals versus analysts’ average estimate of just 1.13 million riyals.

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Source: Business

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