Panic selling again gripped Saudi stock market on Wednesday due to weak oil prices, causing the Tadawul All-Share Index to plunge below 8,000 points.
The Tadawul Index dropped 2.5 percent to 7,991 points, bringing its losses for this month to 12.2 percent.
Over SR5.37 billion worth of shares changed hands on Wednesday. According to Reuters, about SR187.5 billion ($50 billion) of market capitalization has been wiped out in Saudi Arabia so far this month as local retail investors dump stocks.
In an effort to calm the market, a source, quoted by SPA, said the plunge had not been caused by any selling of shares by government bodies seeking to raise money as some media reports had alleged.
John Sfakianakis, Middle East director at Ashmore Group, said: The market has reached a new low as oil remains below $50. Volumes continue to remain low. The real test would be determined when investors return back from their vacation. Foreign investors have not been net sellers more recently. An immediate rebound remains to be seen as investors are cautious.”
Fawaz Alfawaz, a Riyadh-based economic consultant, told Arab News: “What is happening is really a serious adjustment in the price of assets largely because of the perceived changes in the public finances. The changes in government finances are induced by the substantial reduction in the price of oil. The larger adjustment is not in the stock market but in the real estate, which is priced less transparently because of measurement issues and liquidity considerations.”
