DUBAI: The petrochemical sector was the main drag on Riyadh’s stock index in early trade on Wednesday after oil extended its decline, while Egypt’s benchmark retreated as investors’ mood soured.
The Riyadh index was down 1.2 percent in the first hour as Saudi Basic Industries, the largest listed petrochemical stock, shed 2.4 percent. Brent oil futures were trading below $33 a barrel.
The Saudi retail sub-sector index fell 1.1 percent with Al Othaim Markets, a supermarket chain, down 0.9 percent although the board recommended a cash dividend of 2.00 riyals per share for 2015, up from 2014 and above NCB Capital’s forecast of 1.75 riyals.
The retail sector may be hurt this year by the erosion of consumers’ purchasing power after inflation spiked in January. On Tuesday the kingdom’s statistics department said consumer price inflation hit 4.3 percent year-on-year, the highest since the data series began in 2012, after austerity measures in the state budget raised costs of electricity, water and gasoline.
“Looking ahead, we anticipate domestic inflationary pressure to intensify during 2016, driven by second-round effects stemming from the recent energy price reforms,” said a research note by Riyadh-based Jadwa Investment.
Egypt’s main benchmark fell 0.4 percent in lethargic trade. Palm Hills Development and Global Telecom Holding each dropped more than 2.5 percent.
But Beltone Financial continued to rocket, jumping 9.9 percent. The stock has more than doubled in price in the last ten trading sessions.