RIYADH, 24 October 2004 — Saudi Arabia’s stock market index broke above 7,000 points yesterday, hitting a fresh record high as strong third-quarter results maintained their upward pressure on share prices.

The index ended yesterday’s morning trading session up nearly 1 percent at 7,017.8 points, according to the official bourse website. High oil prices and hefty corporate profits have pushed shares in the world’s biggest crude exporter up more than 57 percent this year, after a surge of 76 percent in 2003.

Petrochemical giant SABIC - Saudi Arabia’s biggest listed firm in terms of market capitalization - announced a 101 percent rise in net profit last week to $2.55 billion for the first three quarters of 2004.

Most banks have also had a bumper year to date.

“The market is being driven by record liquidity, record corporate profits and heavy trading,” Riyad Bank said in an economic report released yesterday. “As long as oil prices remain high, this is likely to continue.”

It said 43 companies, representing 95 percent of the market capitalization, had reported results for the first three quarters of the year and their average earnings were up 49 percent on the same period last year - when the Arab world’s biggest bourse was already rising strongly.

In another sign of investor confidence, an initial public offering of shares in the Kingdom’s second mobile phone operator Ettihad Etisalat has been subscribed 18 times over, just half-way through the 10-day subscription period.

Industrial shares rose 1.58 percent in yesterday morning trade. Banking stocks also gained 0.97 percent. The market reopens from 9-11 pm for the evening session - held at night during the fasting month of Ramadan.

Despite the 18-month surge in stock prices, few brokers see signs of a major reversal soon.

The price-earnings ratio of banks stood at 20.7 at the end of last week while industrials were 19.2.

The strong third quarter results brought the overall market ratio down to 21.0 compared to a 10-year average of 15.3, Riyad Bank said.

“That may be relatively high, but given the growth in profits it doesn’t suggest a market bubble just yet,” said Bishr Bakheet of Riyadh-based Bakheet Financial Advisors.

Foreigners cannot directly own Saudi shares but can invest through mutual funds.