Saudi Telecom dragged Riyadh’s market down further early on Monday while other Gulf bourses, many of them reopening after closing on Sunday for the Islamic New Year holidays, were also weak.
The Saudi index, which had tumbled 3.1 per cent on Sunday to its lowest close since March 2011 because of concern over the impact of government austerity measures, dropped a further 1.9 per cent in the first 45 minutes.
Saudi Telecom, the country’s top operator, tumbled 6.7 per cent after the government said it would provide telecommunications firms with “unified licences” allowing them to offer a full range of services.
It did not give details of the new licences, but some investors think they will open industry to tougher competition, potentially hurting market leader Saudi Telecom the most. Shares in three other listed Saudi telecommunications firms had not yet traded on Monday morning.
Some blue chips were bought back with Alinma Bank, the most heavily traded stock, adding 1.4 per cent. Petrochemical giant Saudi Basic Industries was flat.
But after the cabinet last week reduced allowances for public sector employees, some investors fear an announcement of further austerity steps as soon as after Monday’s cabinet meeting – perhaps new fees or taxes on foreign workers.
The bleak mood in Saudi Arabia affected the rest of the Gulf. Dubai’s index dropped 1.0 per cent in a broad-based decline, with all 10 of the most heavily traded stocks lower. Builder Drake & Scull, which has substantial business in Saudi Arabia, sank 3.0 per cent.
Abu Dhabi fell 0.7 per cent as First Gulf Bank slid 0.9 per cent. Qatar’s index also dropped 0.7 per cent.
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