Gulf petrochemical stocks led losses as bourses close lower

10-Jul-08

Five out of seven leading regional stock exchanges in Saudi Arabia dipped extensively lower on Wednesday. The investors in the Gulf's largest market reacted to a speculation of Iran launching attacks against Israel and US navy in the Gulf in response to any US attack over its nuclear program. As a result, Petrochemical stocks engulfed high losses. Saudi petrochemical major, Saudi Basic Industries Corp (SABIC), fell 5.1% to 130 riyals. As per the senior analyst, Petrochemicals may have saturated as the new factories have flooded the market with products, thereby lowering the costs. On the contrary, the feedstock prices are on the rise and the petrochem companies are struggling to offload the rise onto the consumer by hiking their product prices resulting in squeezed profit margins.