After mostly shrugging off the political upheavals in North Africa in recent weeks, the Saudi stock market finally took fright on Saturday, with the key index dropping 6.4% on concerns about Friday’s dramatic events in Egypt.
“Egypt dominated the headlines here and will clearly shape the direction of regional markets until some sort of resolution is found,” notes a trader at Credit Suisse. Another trader in Riyadh said it was unsurprising that the Saudi market finally succumbed to nervousness about Egypt, given the impact Friday’s events had on Wall Street and other major markets.
The Egyptian government was forced to deploy the army after demonstrators fought pitched battles with police, beating them back and setting fire to the headquarters of the Egyptian ruling party. And oil producers like Saudi Arabia may be growing nervous about the free passage of their oil through the Suez Canal, the Credit Suisse trader said.
Saudi companies with big operations in Egypt were especially vulnerable on Saturday, with Savola Group trading 10% lower at SAR27. WSJ