AMMAN, 12 March 2005 — Major Arab stock markets hit record levels this week, buoyed by dividend distributions, surging oil prices and the fledging political stability in Iraq and the Palestinian territories, financial analysts said yesterday.

Given these factors, they expected the rally to continue “in the short and medium terms”, with regional shares drawing additional momentum from the promising expectations of the Q1 2005 profits.

“We are optimistic over the performance of stocks at least in the short and medium terms,” Amer Muasher, head of brokerage at the Jordan National Bank, said. “I believe markets stand to witness a fresh rally in the coming weeks against the backdrop of Q1 expectations, the gradually stabilizing political situation in the region and the arrival of new funds seeking investment outlets,” he said.

However, Musher expected short-lived downward profit-taking corrections to take place from time to time.

Muasher and other analysts said soaring crude prices would lend support not only to markets in the Gulf region, but also to the Amman Stock Exchange (ASE) and other regional bourses “in terms of surplus petrodollars seeking investment opportunities”.

Jordanian stocks extended gains for the fourth week in a row and Muasher raised the possibility of the ASE and Arab bourses making benefit from capitals fleeing from Lebanon. The ASE all-share price index climbed 3.4 per cent in the week ending Thursday, closing at 5,277 points, up from 5,100 points last week, according to the market’s weekly report. “The market is still to be driven by gains of blue chip and tourism industry firms,” a portfolio manager said.

Saudi shares also continued to break new records this week, driven by gains of petrochemical-related companies in the light of the rise on the world market of petrochemical prices and expectations of high profits in Q1 2004, according to the Bakheet Financial Advisors (BFA).

The Tadawul All Share Index (TASI) of the Arab world’s largest bourse gained 3.4 percent this week, closing at 9,432.41 points on Thursday. “TASI is currently 14.9 percent higher than its level on the beginning of the year,” BFA said in their weekly report.

The report expected Saudi stocks “to react positively in the next few weeks to the announcement of Q1 2005 financial results, which are expected to be positive”.

They advised investors to stick to petrochemical firms and avoid “speculative stocks with weak financial results”.

In Kuwait, the KSE all-share price index rose 6 per cent this week, to close at a record high of 7,189 percent, compared with last week’s close at 6,781.8 points.

Kuwaiti shares were propelled by rising oil prices, dividend distributions and profits scored by Kuwaiti firms which have already won Iraq contracts, dealer said.

Egyptian stocks continued their strong performance this week, triggering concerns of imminent and deep corrections in the near future, analysts said.

The Hermes all-share price index climbed 8.9 percent closing at an all-time high of 39,284.73 points, compared with 36,078.32 points last week.