Saudi Arabia's stock market fell sharply on Tuesday after the oil minister said the government was considering whether to raise domestic energy prices, a reform that could initially at least hurt consumer spending and corporate profits. Asked on the sidelines of a mining conference if he expected domestic energy prices to increase in the near term, Ali Al-Naimi said: "What you are asking is: is it under study? And the answer is yes." Naimi did not give any details of the possible changes, which could form part of a major tightening of fiscal policy next year as the government reduces a budget deficit estimated at well over $100 billion in 2015. The International Monetary Fund warned last week that if the kingdom did not take steps to reduce state spending and increase revenues, its huge financial reserves would run out in under five years. In the past, officials have spoken privately of the possibility of cutting price subsidies for gasoline, other fuels, electricity and the gas feedstock used by Saudi petrochemical producers. But Naimi's remarks were the first public confirmation from such a senior official that such measures were being studied. The Saudi stock index sank 3.0 percent to 7,098 points, close to technical support at its August low of 6,921 points. Turnover rose as the market dropped, a negative technical signal. The petrochemical sector index slid 3.4 percent as the top producer, Saudi Basic Industries, fell 2.1 percent. But stocks dropped across the board, with miner Ma'aden slipping 5.3 percent, Al-Rajhi Bank losing 2.8 percent, and Knowledge Economic City, a developer of industrial zones, plunging 10 percent. Most other Gulf markets were also soft because of weak oil prices and global equities. Dubai's index fell 1.0 percent to 3,518 points, testing technical support around 3,500 points, from which it bounced three times in September. Second-tier property developer Deyaar fell 3.2 percent after reporting a 38 percent slump in profit. Peer Union Properties dropped 4.0 percent. Abu Dhabi dropped 0.5 percent although some blue chips were strong, with Aldar Properties up 1.8 percent. Qatar, seen as a defensive market because of high dividend yields and the government's comfortable fiscal position, once again outperformed most of the region, with its index edging down just 0.1 percent. Qatari German Co for Medical Devices soared 9.9 percent in its heaviest trade since June. Earlier this week it reported a nine-month net loss of 9.4 million riyals ($2.6 million) against a year-ago loss of 9.9 million riyals. In Egypt, the index dropped 0.6 percent with activity still focusing on real estate developer Amer Group, down 5.4 percent, and its spin-off Porto Group, which surged in early trade but closed flat. GB Auto climbed 2.1 percent after it said it had signed an agreement with China's Chery International to distribute Chery cars in Egypt.
