Saudi Arabia’s benchmark Tadawul All Share Index (TASI) fell nearly 1 percent on Tuesday, following news of Saudi Aramco’s downgrade by Fitch Ratings.
The materials index, on which petrochemical firms are listed, fell 0.95 percent. Saudi Basic Industries Corp. (SABIC), one of the world’s largest petrochemicals producers, was down 0.66 percent by midday trading. National Industrialization Co. (Takween) was down 0.76 percent.
Banks were down 0.92 percent, as National Commercial Bank fell 0.90 percent, and banking heavyweight Al Rajhi tumbled 0.98 percent.
The Aramco downgrade comes after Fitch lowered Saudi Arabia’s long-term foreign-currency issuer default rating to "A” from "A+” last month, citing rising geopolitical concerns regarding the Kingdom’s balance sheet and infrastructure challenges in the wake of the September 14 aerial attacks on the Kingdom’s key oil installations.
The Saudi index had added more than 20 percent in the first few months of 2019 ahead of joining the MSCI and FTSE emerging market indexes, which helped attract billions of dollars of passive inflows to the market.
Saudi Arabian sovereign dollar bonds also egded down slightly after the Fitch downgrade.
The 2047 issue lost 0.7 cent to 113.34 cents in the dollar, its biggest daily drop in a week. Aramco bonds also slipped, with the 2049 issue shedding 0.4 cent to 109.51 cents in the dollar, Reuters reported, citing Tradeweb data.