Tadawul market cap reached SR 1.44 trillion in January

Updated 05 February 2013
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Tadawul market cap reached SR 1.44 trillion in January

The Saudi stock market has exhibited strong momentum at the beginning of the year in a similar fashion to global equities. The fact that the epicenter of the crisis is doing fine is a testimony of the strength of equities and the growing appetite for risk, with Dow Jones Industrial Average crossing the 14,000 mark, which is the highest since 2007 and the broader S&P 500 off to best start since 1997. The domestic market (Tadawul) is buoyant despite the fact that the 7,000 level remains a psychological barrier.
In January, Tadawul All-Share Index (TASI) closed at 7,043.55 points, gained 242.33 points (3.56 percent) over the close at the end of December 2012. The index gained 6.30 percent compared to the same period of the previous year (end of January 2012).
Highest close level for the index during the month was 7,165.76 as on Jan. 12, according to a Tadawul report.
The Tadawul index closed down 0.11 percent at 7,025.44 points yesterday.
Commenting on the Tadawul’s performance, Tamer El Zayat, senior economist at the National Commercial Bank (NCB), told Arab News: “I do believe that we might continue to see a range-bound movement that might be broken to the upside to around 7,500 in Q2 on the back of robust earnings. Yet, I do subscribe to the theme that global markets have gone too high too soon and that it is likely that equities might exhibit a pull back in the H2, 2013, thus limiting the upside potential for Tadawul this year to a single-digit growth similar to last year.”
In January, total equity market capitalization reached SR 1.44 trillion ($ 383.94 billion), increased by 2.81 percent over the previous month.
The total value of shares traded in January increased by 3.35 percent to SR 128.13 billion ($ 34.17 billion).
The Tadawul report said value of shares traded by individuals was SR 113.15 billion (88.30 percent) for buying, and SR 119.76 billion (93.46 percent) for selling.
The value of shares traded by institutions was SR 12.77 billion (9.97 percent) for buying and SR 7.21 billion (5.63 percent) for selling.
The value of shares traded by foreigners (SWAP) was SR 2.21 billion (1.73 percent) for buying, and SR 1.17 billion (0.91 percent) for selling.
The value of shares traded by Saudis was SR 121.99 billion (95.21 percent) for buying, and SR 123.72 billion (96.56 percent) for selling.
The value of shares traded by the GCC was SR 2.00 billion (1.56 percent) for buying, and SR 1.27 billion (0.99 percent) for selling.
The value of shares traded by foreigners (residents & SWAP) was SR 4.13 billion (3.23 percent) for buying, and SR 3.15 billion (2.45 percent) for selling.
The total number of shares traded reached 4.66 billion shares for the month of January compared to 4.39 billion shares traded during the month of December 2012, thus increasing by 6.03 percent.
The total number of transactions executed during January, however, dropped by 3.74 percent to 2.79 million compared to 2.90 million trades for the month of December.
Asim Bukhtiar, vice president /head of research, Riyad Capital, said: The Tadawul’s January performance benefited from earnings and dividend effect. For the remainder of first quarter, we preclude large movements in the market given the absence of catalysts on the horizon. Surprises may materialize from international headlines and brokers/analysts adjusting outlook for the year ahead as full results become available.”
Jarmo T. Kotilaine, a regional analyst, said: “The recovery we have seen is reflective of the cautious optimism we are beginning to see about the global economy. This has translated into greater optimism in the stock markets and is naturally positive for commodity prices, including oil.”
He added: “Overall, the situation remains mixed with a number of risks on the horizon but the Saudi economy can likely look forward to a good year even if the performance of the oil sector is unlikely to match last year.”
Farouk Miah, head of equity research at NCB Capital, said: “The January performance is encouraging and is a positive sign for the year. For 2013, we expect profit growth of around 12-13 percent for the Saudi market. So even if the P/E multiple remains the same, this should mean the market goes above 7,500.”
He added: “We believe the globally exposed sectors such as petrochemical could perform well given improving global macro outlook, as well as the attractive valuations of the stocks. Earnings growth outlook on the domestically focused areas e.g. retail, telecom and foods remains strong.”


Chinese smartphone maker Xiaomi lowers target as it kicks off IPO

Updated 32 min 23 sec ago
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Chinese smartphone maker Xiaomi lowers target as it kicks off IPO

HONG KONG: Chinese smartphone maker Xiaomi kicked off its initial public offering Thursday but the firm is likely to pull in about $6.1 billion, far less than originally expected, with investors having mixed views about its main business.
Xiaomi had hoped to raise $10 billion with the Hong Kong IPO, making it the biggest since Alibaba’s $25 billion New York debut in 2014 and valuing the company at about $100 billion.
However, the firm is offering 2.18 billion shares at HK$17-HK$22 apiece, according to Bloomberg News, which values it at about $53.9-$69.8 billion.
Xiaomi had hoped to be the first company to list shares in Hong Kong at the same time as launching new Chinese Depository Receipts (CDRs) in Shanghai under new rules announced in April by mainland authorities to open up markets in the world’s number two economy.
But on Tuesday it put off its decision on listing the CDRs until it completes its IPO in Hong Kong. The China Securities Regulatory Commission said it has canceled a listing review originally scheduled for June 19.
This delay, as well as differing market views about Xiaomi’s business model, were also among reasons for the lower valuation.
CEO Lei Jun claimed it was an Internet services company making money via online games and advertisements despite 70 percent of its revenues coming from selling hardware, particularly smartphones.
The firm, which mainly sells cheap but high-quality smartphones in China, is looking to push into Europe — recently opening its first flagship store in Paris — as the home market reaches saturation point.
China Mobile and US wireless-chip giant Qualcomm are among the cornerstone investors and it is expected to list on July 9.
Chinese authorities devised the CDR program, under which homegrown companies listed abroad can simultaneously list at home, after watching technology heavyweights Alibaba and Baidu list on Wall Street.
The objectives of the plan include helping to develop China’s still relatively immature and volatile share markets while allowing domestic investors to invest in the country’s big tech champions.
Alibaba and Hong Kong-listed Tencent have expressed an interest in the plan.
Xiaomi shipped 28 million smartphones worldwide from January to March, an 88-percent surge year-on-year.
That was fourth in the world after Samsung, Apple and China’s Huawei, according to figures from the International Data Corporation.