October 8, 2019 / 8:19 AM / 6 days ago

MIDEAST STOCKS-Saudi stocks fall, led by banks, petchems, after Fitch downgrade

Oct 8 (Reuters) - Saudi Arabia’s stock market fell in early trade on Tuesday, with financial services leading the declines.

Petrochemical shares also fell after Fitch downgraded oil giant Saudi Aramco (IPO-ARMO.SE) and Saudi Basic Industries Corporation (SABIC), following mid-September attacks on the kingdom’s oil facilities.

Fitch on Monday downgraded Saudi Aramco and SABIC to A from A+ after the attacks last month on two oil production facilities. It also considered rising geopolitical tensions in the region and the country’s continued fiscal deficit.

Fitch had downgraded Saudi Arabia’s credit rating to A from A+ on Sept. 30.

The Saudi index was down 0.7%. Al Rajhi Bank lost 0.5% and SABIC fell 0.6%.

The decline put the index in red territory for the year to date. It had gained more than 20% in the first four months of 2019 before joining the MSCI and FTSE emerging-market indexes, which helped attract billions of dollars from passive funds.

However, escalating trade tensions, volatile oil prices and growing geopolitical risks have weighed on the market since then and kept active emerging-market funds from investing in the kingdom.

Saudi Arabia’s inclusion in the MSCI developing-economies equity benchmark has failed to pull in active emerging-market funds because of high valuations and reputation risks, an analysis by Copley Fund Research showed. [

Dubai’s index was down 0.3%. Dubai Islamic Bank lost 0.8% and Emirate Integrated Telecommunications fell 1.2%.

In Abu Dhabi, the index edged down 0.1%. National Bank Of Umm Al Qaiwain fell 5.3%. ADNOC Distribution dropped 2.6% as the fuel retailer traded ex-dividend.

The Qatari index was up 0.2% with Qatar Fuel rising 1.6% and Qatar Islamic Bank edging up 0.7%.

Reporting by Maqsood Alam in Bengaluru, editing by Larry King

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