RIYADH, 20 August 2004 — Soaring oil prices and investor optimism buoyed Saudi shares for the ninth consecutive week, with the all-share index gaining 1.5 percent in the week ending yesterday to hurdle a 6,300 point psychological level.
The index closed at 6,312 points compared to 6,219.19 points a week ago. The benchmark index of the largest Arab bourse is up more than 42 percent this year after rising 76 percent in 2003.
“As a result of the recent high level of oil prices, investors are more optimistic about Saudi companies high profit growth for the third quarter,” Bakheet Financial Advisors said.
“We expect the market to continue its gradual rise.”
Oil prices have risen about 28 percent since June and yesterday, they struck a fresh record high of $47.56 a barrel.
The high prices are a boon to Saudi Arabia, the world’s biggest crude exporter, bolstering corporate earnings and raising investor liquidity.
Market turnover rose to SR43.7 billion ($11.7 billion) from 37 billion a week earlier.
Saudi Electricity Co. was the week’s most active share, accounting for 10.5 percent of trade and closing 1.4 percent up at SR147.75. Last month, the company - the third largest listed on the bourse - posted a first-half net profit of 56.7 million from losses of 334.9 million a year ago.
Saudi Basic Industries Corp. (SABIC), the Middle East’s biggest petrochemicals producer, was also busy and rose 5.7 percent to SR571.
But Saudi Telecom, the largest firm listed on the bourse, maintained its downtrend this week, shedding 3.5 percent to SR502. Shares in the firm have been dropping after the government said that a consortium led by the UAE’s Etisalat would set up a rival mobile network with third-generation technology, breaking Saudi Telecom’s monopoly.
Meanwhile, Kuwaiti shares defied the normal summer lull to set a record high in the week to Wednesday on the back of better-than-expected half-year corporate results, traders said.
The Kuwait Stock Exchange (KSE) index finished the week on 5,797.80 points, up 1.4 percent on last week’s close of 5,719.00 points.
The index is now up 21 percent on last year’s closing of 4,790.20 points.
The bourse, which normally witnesses sluggish trading in the summer months, made key gains in the past few weeks on better-than-expected half-year results for most of the 110 listed firms.
Net profits of all listed firms reached $2.54 billion on June 30 this year, a 15 percent rise on their level a year ago.
The market has also rallied on the back of abundant cashflow and strong oil prices.
The index ended the first half of the year up 13.9 percent on last year and was up 52 percent on its level a year ago.
The bourse has made steady gains since 2000.
Average daily trading this week rose by 20.7 percent to 61.2 million dinars ($207.5 million), up from 50.7 million dinars ($171.9 million) last week.
The average during the first six months of the year was $227.8 million.
Last year it was $223 million, up on $86.4 million in 2002 and $48 million the previous year.
With a capitalization of $58 billion, the KSE is the second-largest stock market in the Arab world after Saudi Arabia. It has 110 Kuwaiti and non-Kuwaiti listed firms.