Dubai: Saudi stocks fell, extending their slump for another session on indications of an absence of a deal in Algiers and after the government announced austerity measures.

The Tadawul All share index fell as much as 4.6 per cent before closing 3.42 per cent lower at 5,534.43.

“I’m surprised with the fall in Saudi stocks. I think its gone too far and the slump is overdone,” Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s asset management group, adding “this slump should have stopped already.”

Alinma Bank closed 7.49 per cent lower at 11 Saudi riyals, while Saudi Kayan Petrochemicals closed 5.45 per cent lower at 5.20 Saudi riyals. Out of a total of 166 stocks traded on the exchange, shares of 163 firms fell, while 3 rose.

“The valuations even in low-growth environment are pretty good, and I don’t think we deserve this kind of punishment that we are seeing,” Khokhar said, adding “value is there, but it’s a momentum market driven by retail investors and, if the markets are spooked, they don’t really look for valuations.”

The benchmark Tadawul index has shed nearly 9 per cent in the past two sessions, taking the losses to 20 per cent so far in the year.

Fund managers advised investors to stick to the large caps like Saudi Basic Industries — which is below 50 Saudi riyals — besides real estate and insurance stocks.

Elsewhere in the region, the sell-off in Saudi didn’t impact UAE stocks. The Dubai Financial Market General Index closed 0.40 per cent lower at 3,452.60. The Abu Dhabi Securities Exchange closed 0.51 per cent lower at 4,448.69.

“UAE markets were stable, given what happened to Saudi today. If the sell-off continues, we don’t think local markets would be able to stay isolated from Saudi,” Khokhar said.

Gulf Finance House, which was the most active stock in trade, closed more than a per cent higher at Dh1.10.

“The outlook is good. We like real estate names even though oil prices nervousness is causing gyrations,” said Khokhar.

Qatar exchange index closed 0.07 per cent lower at 10,465.43. Muscat Securities MSM 30 index closed 0.39 per cent lower at 5,726.16.