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Sun 15 Sep 2019 11:46 AM

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Saudi stocks fall more than 3% after drone attack

The Arab world's largest capital market shed some 200 points in the first few minutes after the opening bell, before regaining some of the losses

Saudi stocks fall more than 3% after drone attack
The Tadawul All Share Index fell as much as 3.1 percent at the open, led by Al Rajhi Bank and Saudi Basic Industries Corporation, both of which declined at least 3 percent.

Saudi Arabian stocks sank after drone strikes highlighted the vulnerability of the kingdom’s oil facilities to terrorist attacks.

The Tadawul All Share Index fell as much as 3.1 percent at the open, led by Al Rajhi Bank and Saudi Basic Industries Corporation, both of which declined at least 3 percent.

The drop erased this year’s gain and lowered the gauge’s valuation to the weakest since March, before the kingdom’s stocks were included in MSCI Inc.’s emerging-market gauge. Equities in Dubai, Kuwait and Bahrain retreated as much as 1.3 percent.

This is a “very tense situation,” elevating risk in the region “to unprecedented levels,” said Mohammed Ali Yasin, the chief strategy officer at Al Dhabi Capital in Abu Dhabi.

The attack cut production in half and was the biggest on Saudi Arabia’s oil infrastructure since Iraq’s Saddam Hussein fired Scud missiles into the kingdom during the first Gulf War.

Iran-backed Houthi rebels in Yemen, who’ve launched several drone attacks on Saudi targets in the past, claimed responsibility for the assault on Saudi Aramco’s Abqaiq plant, one of the world’s largest crude-processing facilities.

US Secretary of State Michael Pompeo in a tweet blamed Iran directly, but didn’t offer any evidence.

Government funds may swoop in to limit the decline in Saudi stocks, said Joice Mathew, the head of equity research at United Securities in Muscat.

“Being Sunday, foreigner participation may not be in full swing, and that should help government funds intervene more effectively,” Mathew said. If they do, their support “could be identified if we see any sharp recoveries in first 90 minutes of trading,” he said.