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Saudi stocks decline again as oil sinks further

Business | 2020-02-10 18:17:21
Saudi stocks decline again as oil sinks further
Saudi Arabia’s main stock index dropped for a third day, finishing below a mark it has held since December, as the coronavirus reduces demand for oil.

The Tadawul index fell 1.3 percent, the most among major gauges in the Middle East and below its 100-day moving average for the first time this year. State oil producer Saudi Aramco retreated as much as 1.8 percent during the session, but recovered near the close to finish higher.

Banking and materials stocks pressured the gauge after oil declined for a fifth straight week last week, with Russia yet to back Saudi Arabian calls for OPEC to cut production. Investors also reacted negatively to the U.S. Federal Reserve saying the virus posed a threat to global markets.

“Aramco has direct implications with Chinese oil demand, both in price and volume terms,” said Vrajesh Bhandari, the senior portfolio manager at Al Mal Capital in Dubai.

The shares have still performed well relative to crude prices, he said. While Brent has slumped 17 percent this year, Aramco is down 3.4 percent.

Saudi Arabia’s non-oil growth rate in the third quarter was the highest in five years and momentum continued in the fourth quarter, said Bloomberg Economic’s Ziad Daoud. Still, he said, “two headwinds could derail this recovery: public spending cuts, and a reduction to oil output in response to the spread of the coronavirus.”

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