Saudi shares dive after kingdom announces record deficit

Saudi shares dived at the start of trading Tuesday a day after the oil-rich kingdom announced a record $98 billion deficit this year and said it was drastically cutting fuel subsidies.

The Tadawul All-Shares Index (TASI) fell by 3.1 percent minutes after opening to 6,777.05 points, close its lowest level this year.

Only the insurance sector rose slightly amid the losses, led by the key petrochemical sector, which shed 6.3 percent. The banking sector also lost 2.6 percent.

TASI and other Gulf bourses have witnessed sharp volatility throughout 2015 mainly due to the slump in oil prices that led to spending cuts by regional governments and hit corporate profits.

Saudi Arabia said on Monday it posted a deficit of $98 billion (89 billion euros) in 2015 after a sharp decline in oil revenues.

The kingdom also projected a deficit of $87 billion for 2016, the third year in a row with a shortfall.

To counter the impact of sliding oil revenues, the world’s top crude exporter said it was applying unprecedented cuts to public subsidies on fuel, power and water.

Other Gulf markets were also down Tuesday.

Dubai dipped 0.4 percent, Abu Dhabi 0.27 percent, Qatar 1.1 percent and Kuwait 0.94 percent. The small exchanges of Oman and Bahrain fell 0.2 percent and 0.4 percent, respectively.

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  • amador kester

    If they could not use those oil windfall mega billions to establish a sound industrial base by now then welcome to nigeria, welcome to the comity of recklessness

  • Lemmuel Odjay

    I hope our NLC and the Senator Sani as well as the Aregbesolas are reading this. The Saudi oil economy includes a diverse petrochemical products manufacturing base which we do not have. Yet they are now down on their knees for failing to diversify their economy radically and for not creating the right environment for the private sector enterprise to compete globally. They have instead “shared” away resources among people who should really be striving on their own. Oh, how we love to emulate the Saudis! Now the chickens are home to roost…

    Those who hope to lead their people into the wilderness by running a primitive populist centered style of governance instead of creating the opportunities that could free their people and spur them to excel on their own would always be the first to fall into dire straits with every wind of adversity. Now that we in Nigeria have succeeded in becoming state governors and senators, what are we going to do with it? Create the opportunities or sit down as we wait to share dwindling oil revenues every month? Tufiakwa !!!