RIYADH, April 15: Saudi shares tumbled almost six per cent on Saturday in a wave of speculative selling unleashed last week by a crackdown on market manipulation.

The main stock index of the Arab world’s largest bourse closed the morning session 5.99 per cent down at 14,775 points, having fallen as much as 8.58 per cent earlier in the day.

Some big private funds want to buy at low prices and are pushing down the market, said Abdelmounaim Addas from Zad Investment.

Last week the index tumbled 15 per cent in the three trading days to Tuesday after the Saudi regulator suspended two dealers on allegations of market manipulation.

Brokers said speculators triggered the sell-off fearing their grip on the bourse was threatened.

The volume of speculative capital in Saudi Arabia is huge, swollen by record oil revenues. Managers of massive private portfolios, often acting in concert, have enormous clout in a market that has little institutional capital.

Before the latest downturn funds had invested about 150 billion riyals ($40 billion) in a market that was worth more than $600 billion. Market liquidity depends on large speculators.

The market sank 8.3 per cent on Monday, its largest one-day decline on record, and tumbled 6 per cent on Tuesday.

Then traders said the government struck back, buying through its funds and lifting the market by 3.7 per cent on Wednesday. The bourse was closed on Thursday and Friday.

Traders said Saturday’s selling was similar to that seen last week with speculators focusing on industrial, cement and electricity companies that carried out a 5-for-1 share split over the weekend.

Speculators want to play on market nerves and (trigger more selling in) these coveted stocks, said one senior Saudi trader.

Petrochemical giant Saudi Basic Industries, the market’s largest company, fell 5.6 per cent.

Saudi Electricity was the most heavily traded stock, falling almost the maximum 10 per cent allowed in a single day. The shares were trading at 70 times 2005 earnings.

A spokesman for the Saudi Capital Markets Authority said there was no justification for such sharp fluctuations.

I advise traders in the market not to base their buying and selling on rumours..., Abdulaziz Alzoom said Dubai-based Al Arabiya television.

Turnover on Saturday morning was around 5 billion riyals.—Reuters