JEDDAH, 5 November 2006 — After falling 11.54 percent last week, the Saudi stock market continued to plunge with the Tadawul All-Share Index (TASI) falling below 9,000 yesterday. The TASI closed at a 20-month low at 8,793.61, down 534.86 points or 5.73 percent, the lowest since Feb. 22, 2005.

The index is lower by 47.38 points so far this year after closing at 16,712.64 points on Dec. 31, 2005. TASI reached an all-time high of 20,634.86 points on Feb. 25 this year.

Despite the overwhelming response to the initial public offering (IPO) of Al-Babtain Power and Telecommunication Co. which opened for subscription yesterday, it still had little impact on the falling Tadawul index. The stock market turnover was also meager at SR6.58 billion yesterday.

All the indices were in the red. The Agriculture index dropped 9.84 percent, followed by the Services index, 8.83 percent, the Industrial index 6.19 percent and the Cement index 6.08 percent.

Coinciding with Al-Babtain IPO was the introduction of Red Sea Housing which also opened in a special trading session from 4 p.m. to 6:30 p.m. under code 4230. The Red Sea Housing shares opened at SR115, nearly double the initial price of SR58, and reached as high as SR119 and low of SR77 before settling at SR86, up 48.28 percent on debut.

Financial analyst Mohammed Al-Shumambri, CEO and owner of Shumambri Investment Company, told Arab News: “I found the performance of Red Sea Housing on its initial day of trading to reflect the market’s weakness and lack of equity due to the overpriced IPOs that have been up for subscription recently.”

Many investors trying to regain some of their massive losses over the past four trading days rushed to sell shares when the markets opened. “I have lost a substantial amount and am here to sell my shares. Some of the profits I will use as liquid cash and with some of the money, I will buy Al-Babtain shares to sell in a couple of months time. After all, no one really knows where the market is heading,” said Abdul Raouf, a Saudi investor.

Still others decided to play it safe and sell, retaining the cash for other more pressing needs. “I have come to the bank today to sell my shares of Red Sea Housing and pay my mobile bill before Al-Jawwal disconnects my service,” Sawsan Al-Haddidi told Arab News.

Abdullah ibn Safran, a technical stock market analyst and manager of a leading investment portfolio, said the Saudi stock market index would move upward after reaching the level of 8,300 points. His comment was based on the Elliot Wave Theory for technical analysis of stock markets. He predicted that the index would rise to higher than the previous record of nearly 21,000 points.

Addressing a seminar in Riyadh, Safran said the Elliot Wave Theory is one of the best to predict the rise and fall of stock exchanges. “The theory defines the identity of each soaring and correction movements of the index based on the psychology and attitude of dealers,” he explained. He urged investors to develop advanced systems for technical analysis and reading price indicators to reduce risk.

Economist Muhammad Al-Qahtani advised small investors not to put their money in Saudi stocks until stability returns to the market.

“By stopping their dealings with the market, they can show their dissatisfaction with the market situation and send a message to market makers that the situation has become frightening,” he said.

Apart from Red Sea, the other gainer was Arab National Bank. Its shares rose 8.57 percent to close at SR114 yesterday. Shares of the petrochemical giant Saudi Basic Industries Corp. (SABIC) also plunged over 5 percent to SR103.

Shares of the newly listed The Emaar Economic City (EEC) dived 9.80 percent to close at SR23.