JEDDAH, 15 October 2004 — Companies listed on the Saudi stock market are expected to make a profit of SR38 billion by the end of this year, having made SR30 billion already.
This was disclosed in a market analysis presented by Dr. Nahed Taher, senior economist at the National Commercial Bank, at a seminar hosted by NCB on financial markets and investment opportunities in the Saudi market for its major female clients.
Dr. Taher presented a detailed analysis of the benefits and risks of investing in the stock market based on a review of economic and physical records. She pointed out that there was a direct correlation between financial growth and national economic progress.
She revealed that the assets of participating companies in the Saudi stock market exceeded SR576 billion at the end of August 2004 and that 50 percent of the value of these stocks is exchanged in the market. In reference to the international data in exchange markets, she indicated that the performance of international stock markets last year was better than this year. She said that market indicators were determined by petroleum prices, economic development, liquidity and lower interest rates.
She stated that the unifying factors between the oil prices and profits of companies incorporated in the stock market rose from 0.6 in the period 1995-2001 to 0.94 during the years 2003-2004. This raises the market level of risk and forces investors to be concerned about the importance of choosing company stocks that are economically sound as well as less vulnerable to fluctuating oil prices.
Dr. Taher said that the most important sectors, which have seen high increases in their stock prices, have been communications, banks and industry. And it is up to Saudi women investing in Saudi stocks to put their investments in economically productive companies and direct their wealth toward economic sectors that have positive returns such as petrochemical, cement, and communications, or financial sectors. This helps in the diversification of the economic basis and the reorganization of Saudi economic structure in the long term.
From another perspective, Jumana Abdulmajeed, client advisory manager at NCB, presented a detailed explanation on the Al-Manara Investment portfolio which differs in content based on the ratio of investment tools which are invested in them and designed carefully. She added that these portfolios are divided into three open types, which are investment funds that are invested into different groups of NCB funds and NCB investment development certificates. In addition, those portfolios are assessed by American dollars; hence they are distributed over different groups and kinds of assets, currencies and geographical locations.
In reference to regular investments, Jumana claimed that NCB allows the client to invest equal amounts into the Al-Manara portfolio or any other portfolio, which suits the client. Hence the choice of investment fund is based on the goals of the investor and the level of risk she is willing to take.
In her concluding remarks, Dr. Taher said that the bank’s regular investment services give the client the opportunity to participate with the amount which suits the financial capabilities of the client and are characterized by the ease with which one can participate.
A number of banking specialists participating in the seminar advised the audience that the investing woman should develop a diverse investment portfolio with various risk levels and she should research the standing of the company and its value in terms of finance and profitability so that they do not invest in a failing company. She should also understand the importance of being patient in order to achieve greater results.