RIYADH/KUWAIT, 27 August 2004 — Saudi shares closed at a record high yesterday after high oil prices and solid company results pushed the all-share index up 1.1 percent for the week.
The benchmark index of the largest Arab bourse rose to 6,382.11 points from 6,312 last week, for a gain of 43 percent this year after rising 76 percent in 2003.
“On the high level of oil prices and investors’ optimism ... and positive financial results for Saudi companies, we expect the Saudi stock market to continue recording new high levels during the next weeks,” Bakheet Financial Advisors said.
Market turnover rose to SR47.6 billion ($12.7 billion) from SR43.7 billion a week earlier. Gainers outnumbered decliners in the week by 53 to 19.
Saudi Electricity Co. was the most active share for the second consecutive week, accounting for 13.4 percent of trade and closing up 1.9 percent at SR150.50.
Last month, the company - the third largest listed on the bourse - posted a first-half net profit of SR56.7 million, compared with a loss of SR334.9 million a year ago.
The National Company for Glass Industries was the second most active share of the week, accounting for 6.1 percent of trade and closing up 12.8 percent at SR264.50.
Saudi Telecom, the largest firm listed on the bourse, reversed last week’s downtrend and inched up 0.5 percent to SR504.50.
Shares in the firm fell after the government said earlier this month that a consortium led by the United Arab Emirate’s Etisalat would set up a rival mobile network with third-generation technology, ending Saudi Telecom’s domestic monopoly.
Meanwhile, Kuwaiti shares rallied in the week closing Wednesday to set a new all-time high on the back of strong oil prices and a positive economic outlook, analysts said. The Kuwait Stock Exchange (KSE) index, which finished the week on 5,848.10 points, up 0.9 percent on last week, is now up 22.1 percent on last year’s closing of 4,790.20 points.
Brushing aside the unrest in neighboring Iraq and two interest rate hikes by the central bank over the summer, the bourse continued its rise on solid half-year results and expectations of even higher profits in the third quarter.
Net profits of all listed firms reached $2.54 billion on June 30 this year, a 15 percent rise on their level one year ago.
“The most important factor was that most of the profits came from operational revenues, rather than speculation of stocks,” said Sami Al-Hasawi, deputy director of Kuwait Financial Center.
“The outlook for better profits in the third quarter is highly positive. Several Kuwaiti companies have won lucrative contracts and this will reflect on the market,” he told AFP. KSE has also rallied on the back of abundant cashflow and strong oil prices with forecasts that the oil-rich emirate is headed for a huge surplus for the sixth consecutive year.
Hasawi said the Kuwaiti market’s profitability in the first eight months of the year has been lower than markets in neighboring Gulf states and thus “there is great potential for a rise in profits at a very low risk.”
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, however, dropped by 15.3 percent to 53.1 million dinars ($180 million) from 61.2 million dinars ($207.5 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 over $64 billion, the KSE is the second-largest stock market in the Arab world after Saudi Arabia. It has 112 Kuwaiti and non-Kuwaiti listed firms.
Its market value is more than that of the United Arab Emirates’ two stock markets combined, Abu Dhabi Securities ($40.5 billion) and Dubai Financial market ($23 billion).