Sunday, October 26, 2008

OPEC Cuts Oil Output

Surprise, surprise!

All the more reason to get off our addiction to oil!!!!

-- The Saudi Arabian Stock Exchange began the week Saturday with its largest decline in four years, a reaction to the world's tumbling markets and oil prices, an economist said.

Gulf Cooperation Council financial officials met in Riyadh, Saudi Arabia, on Saturday.

Gulf Cooperation Council financial officials met in Riyadh, Saudi Arabia, on Saturday.

The index for all stocks finished the day down 536 points, or 8.7 percent, and several sectors dropped almost 10 percent, according to the Web site for the exchange, known as Tadawul. Saturday is the first day of the week according to the Saudi Arabian calendar.

But there's little reason to worry about the drop, according to John Sfakianakis, chief economist for the Saudi British Bank. The precipitous drop in stock values is probably related to the tumbling U.S., European and Asian markets, as well as the falling price of oil, the economist said.

"It shouldn't be a benchmark for the well-being of the economy," Sfakianakis said.

After the markets closed, the state-run news service reported that King Abdullah announced that he would deposit 10 billion riyals ($2.67 billion) into the Saudi Bank of Credit and Saving. The "royal gift" will be used for loans to citizens, the Saudi Press Agency reported.

Under Saudi law, no company or sector can lose or gain more than 10 percent of its value in one day, Sfakianakis said.

Saudi stocks fell as financial officials from Gulf Cooperation Council states met in the Saudi capital of Riyadh to discuss the international economic crisis. King Abdullah also met Saturday with U.S. Deputy Treasury Secretary Robert Kimmitt and U.S. Ambassador Ford Fraker.

Insurance agencies, banks and oil refineries were among the Saudi companies to hit the 10-percent threshold in Saturday trading, according to the Tadawul site.

Trading was cut off for companies whose values dropped 10 percent, in accordance with Saudi law, Sfakianakis said. Any purchases or sales of those companies' shares made after the cutoff will be represented in Sunday's transactions, he said.

Also, several sectors came within fractions of a point of hitting the threshold, including hotel and tourism (9.93 percent), real estate development (9.9), media and publishing (9.89) and retail (9.86).

Although all indices fell, according to the Tadawul Web site, the energy and utilities sector fared the best, losing only 6.4 percent of its value in Saturday trading.

Despite the stock plunge, Sfakianakis said, the Saudi economy remains strong and is showing signs of real growth in its gross domestic product.

Oil prices -- a staple of the Saudi economy -- will probably rise again, and the Saudi banking system is healthy and "one of the best capitalized financial sectors in the world," he said.

Light crude closed Friday at $64.15 a barrel, down $3.69. It was trading at more than $130 a barrel over the summer.

Investors are expected to jump back into the Saudi markets as the declining stock prices yield more and more bargains, he said.

"The news is not that bad," Sfakianakis said. "I'm very optimistic about the Saudi economy."

Gulf Cooperation Council financial officials released a statement Saturday saying they had taken precautionary measures to stem the effects of the world financial crisis and stood ready to confront further developments, according to the state-run Saudi Press Agency.

The group also announced that it would sign a free-trade agreement with the European Union by year's end, the agency reported.

"The growth of the economies of the GCC countries is expected to continue with good rates," the agency reported.

The GCC comprises Saudi Arabia, Kuwait, Oman, Bahrain, Qatar and the United Arab Emirates.

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The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

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