Saudi Arabia’s Tadawul falls to three-year low over China growth fears

China’s decision to weaken its currency pushed the Shanghai Composite back into positive territory, closing up 2.25 per cent, on Wednesday. ChinaFotoPress / Getty Images

Saudi shares suffered their worst one-day fall in more than four months, as fears over China’s growth fuelled a global equities and commodities sell-off.

The price of oil dropped below $35 to hit an 11-year-low.

The Tadawul All Share Index fell 3.34 per cent to a three-year low, as MSCI’s Emerging Markets Index dropped to a six-year lows after China’s central bank weakened its currency in an attempt to arrest recent stock market declines and bolster economic growth.

Sabic shares fell 3.23 per cent to 70.48 Saudi riyals, their lowest level since August 2009, while NCB fell 3.67 per cent to 48.53 riyals.

“Initially, markets looked as if they would hold around the level of yesterday’s close, but the currency move in China hurt other Asian markets, which had a negative overspill in Europe as well,” said Julian Bruce, the head of institutional trading at EFG-Hermes in Dubai.

“That negative sentiment, coupled with sharply lower oil prices, meant bad news for Saudi. There’s not a lot of positive sentiment around fourth-quarter earnings either, so there aren’t many bright spots right now.”

China’s decision to weaken its currency pushed the Shanghai Composite back into positive territory, closing up 2.25 per cent, but prompted further equity sell-offs across Asia, Europe and the Middle East.

Japan’s Nikkei and Hong Kong’s Hang Seng indexes ended the day down about 1 per cent.

Oil prices, meanwhile, shrugged off fears of increasing tensions between Saudi Arabia and Iran, falling to new lows on concerns of global oversupply.

Brent crude futures fell to a new 11-year low of $34.92 per barrel yesterday afternoon, ahead of the publication of inventory data by the US department of energy.

“A firmer US dollar, concerns about demand and the plentiful supply are weighing heavily on prices,” said Carsten Fritsch, a senior commodity analyst at Commerzbank in Germany in a research note yesterday.

“The majority of market participants see the tensions between Saudi Arabia and Iran as negative for the oil price because they make it unlikely that Opec will agree on any concerted action to reduce the oversupply.”

Shares in the UAE, meanwhile, escaped relatively unscathed. The Dubai Financial Market General Index drifted lower for the fourth consecutive day, declining 0.23 per cent at 3,071.62, dragged down by Emaar Properties and Arabtec Holding.

Emaar shares, which have yet to post a one-day rise this year, retreated a further 1.45 per cent to Dh5.42, their lowest level in more than three weeks.

Shares in Arabtec Holding closed 2.44 per cent lower at Dh1.20.

The Abu Dhabi Securities Exchange General Index closed down 0.53 per cent at 4,260.71, as the banking shares surrendered some of their gains made yesterday.

Shares in FGB, which rose 3.25 per cent yesterday, retreated 1.57 per cent to Dh12.50, while ADCB fell 2.4 per cent to Dh6.50.

Etisalat shares, meanwhile, rose by 1.86 per cent to Dh16.40, their highest level since late November.

Follow The National's Business section on Twitter