Saudi Arabia's stock market fell sharply on Sunday, snapping three sessions of gains as the prospect of more stringent measures to cope with the coronavirus and Moody's downgrading of the kingdom's outlook soured investor sentiment.
The kingdom's finance minister on Saturday said the country will take strict and painful measures to deal with the economic impact of the coronavirus pandemic and "all options for dealing with the crisis are open."
One measure would be to slow down government projects, including mega-projects, to reduce spending, he said.
Saudi Arabia's benchmark index plunged 5.7%, its biggest intraday fall since March 09, weighed down by an 8% drop in Al Rajhi Bank and a 5.2% fall in oil giant Saudi Aramco.
Moody's Investors Service cut Saudi Arabia's outlook to "negative" from "stable" on Friday, citing higher fiscal risks due to the crash in oil prices, and uncertainty about the government's ability to offset revenue losses and stabilize its debt in the medium term.
"Market is down given the unavoidable austerity measures, depressed economy and fiscal pro-cyclical measures. This is the time to concentrate on saving the domestic economy and that requires massive fiscal support and cutting excess fat inside and acquisitions outside," said John Sfakianakis, senior scholar at the University of Cambridge.
"The domestic economy needs to take prescience at all costs now as this is a never seen before crisis of multiple black swans," he added.
In Dubai, the index closed 4% down, with Emaar Properties sliding 4.8% after Moody's changed the outlook for the developer to negative from stable.
Meanwhile, President Donald Trump's revived threat of new US tariffs against China dampened risk appetite.
The Abu Dhabi index dropped 3%, as the largest lender First Abu Dhabi Bank lost 3.3%.
Qatar's index slipped 0.9%, hurt by a 1.4% drop in Qatar Islamic Bank.
Outside the Gulf, Egypt's blue-chip index dropped 3.3%, with Commercial International Bank falling 2.3%.
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