Share Index lost more than 20 percent of its value in the past week, down to its lowest since July 2009 amid concerns of turbulence in the region. The panic selling has been indiscriminate, hitting all stocks, ignoring Saudi Arabia's healthy economy and fiscal strength. Local investors, who dominate trading across the region, have been the heaviest sellers. TASI traded below 14 times earnings, compared with a historic average price to earnings ratio of 20. This sell-off has affected Saudi Arabia's smaller neighbors. Dubai's stock market has plunged to a seven-year low, and even wealthy, stable Qatar has been hit. Investors are shunning assets in the Middle East and North Africa as the political turmoil, which started in Tunisia more than two months ago, expanded to Oman, Bahrain, Yemen, Libya and Iran. Bahrain's BB All Share Index lost 0.9 percent Thursday. Kuwait's SE Price Index fell 0.5 percent and Qatar's measure declined 2 percent. Abu Dhabi's ADX General Index gained 0.3 percent and Oman's MSM30 Index advanced 0.7 percent. “It's getting very serious,” said Said Hirsh of Capital Economics. “I'm surprised it's become this bad as the economic fundamentals are still strong.” Investors are apprehensive about holding any positions over the weekend on worry over any deterioration in political situation. Nabil Farhat, partner at Abu Dhabi-based Al-Fajer Securities, said “investors are worried about fresh calls for protests” in the region. “If these calls die down, then we might see a sharp rebound in stock prices,” he added. Savola dropped 9 percent Wednesday, extending losses made earlier in the week and adding to cheap valuations of the company. “We believe long-term investors should take advantage of the current market weakness in establishing inexpensive entry points,” said Tariq Al-Alaiwat, an analyst at NCB Capital. Petrochemicals shares are trading at 14 times earnings, telecommunications at 11.8 times and dividend yields on many stocks are now also quite compelling. Even large government agencies, which have not been active in the market over the past six months, bought at least SR589 million in securities last month, data from NCB Capital show.
