Tadawul tumbles 5.4%; sliding crude prices, global equities to blame

The slide in oil prices below $30 and global equities have been impacting the investor sentiment as well as the Saudi stock market (Tadawul), economists have said. 
On Sunday, Tadawul saw its lowest close since March 2011, when the stock market index tumbled 5.4 percent in almost indiscriminate selling to 5,520.41 points. The index suffered 20.13 percent drop in the first 17 days of this year. Other Middle East stock markets also plunged to new multiyear lows during the day.
The value of Saudi traded shares exceeded SR5.26 billion. The petrochemical industries index, however, dropped 5.13 percent during the day.

Faisal Alsayrafi, president of the Jeddah-based Financial Transaction House, told Arab News: “The slide in oil prices and global equities triggered panic among investors which is impacting the Saudi stock market. There is uncertainty among stock investors about oil prices as Tadawul largely follows oil trends.”
James Reeve, deputy chief economist and assistant general manager, Samba Financial Group, said: “I don’t see much improvement in Tadawul, unfortunately. Corporate results are closely linked to government spending, and we expect another cut in government spending this year. Also, any drop in the oil price will trigger further falls in Tadawul. I think this will be a tough year for the stock market.”

A regional analyst said: “Right now, the markets are dominated by anxiety about China and the oil glut, which is expected to be exacerbated by the removal of the Iranian sanctions. A lot of what we are seeing is an overreaction to uncertainty.”