Saudi energy and oil stocks bore the brunt of radical plans to slash spending in the kingdom yesterday, triggering a slump in the country’s flagship Tadawul All Share index.
On Monday King Salman laid out a radical austerity programme to slash capital expenditure in the Arab state after its deficit ballooned due to the global plunge in oil prices.
The Tadawul index fell by 3.23 per cent on opening yesterday after oil-related stocks lost 3.8 per cent and energy stocks dropped 5.3 per cent.
The Tadawul later repaired losses to end the day just 0.9 per cent down.
The Saudi Basic Industries Corporation, a conglomerate which is 70 per cent owned by the Saudi government, was the biggest drag on the index, down 4.6 per cent, while a host of petrochemical companies also slid.
Sahara Petrochemical, a big oil exporter, fell to its lowest level for six years.
Saudi Arabia plans to slash spending next year to 840bn riyals (£151bn) from 975bn riyals in 2015. The country’s budget deficit rose to 367 riyals in 2015 – equivalent to about 16 per cent of its GDP. The state wants to narrow this figure to 326bn riyals by next year’s budget.
Oil revenues make up about three-quarters of the kingdom’s revenues, but these fell 23 per cent this year, sparking the shake-up in policy.
The kingdom is the de facto leader of Opec, the group of leading oil producers, but has resisted calls to cut supply despite a glut of oil helping to lower prices.
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