AMMAN, 27 November 2004 — Middle East stock markets are expected to be in a “consolidation phase” in December with investors involved in a series of profit-taking moves ahead with what they predict to be a strong performance in the new year, analysts said yesterday.
“I believe bourses will be in a consolidation phase in December. We expect a series of corrections and profit-taking moves to take place as funds usually liquidate their assets at this time,” Saqr Abdul Fattah, portfolio manager at the Housing Bank for Trade and Finance, told Arab News.
“However, we expect shares to take a strong upward swing as of the beginning of the new year, thanks to a high level of liquidity, good profits of listed firms and encouraging political developments in the region,” he said.
The Amman Stock Exchange was the scene of dramatic moves this week regarding both prices and turnover.
The ASE all-share price index climbed 8.01 percent crashing the psychological barrier of 4,000 points and ending the week at a record level of 4,021 points compared to last week’s close at 3,722 points, according to the market’s weekly report.
The Jordanian stock market was led by the banking sector particularly the heavyweight Arab Bank, the share of which gained 15 percent this week.
The Arab Bank apparently received additional backing from news of its conclusion of an agreement with the Gulf Cement Company in the United Arab Emirates for financing a big portion of the firm’s $370-million expansion project, dealers said.
In Saudi Arabia, the SSE price index climbed 6.8 percent this week, closing at a new historical high of 8,256.8 points, buoyed by blue chips mainly the Saudi Basic Industries Co. (SABIC) and the Saudi Telecom Co. (STC), which gained 9.1 and 9.3 percent respectively.
However trading was marred on Wednesday by a decision on the part of the Stock Market Commission to limit the volatility band of the Saudi Electricity Company (SEC) to only 1 percent either direction after its share witnessed a sudden rise of 6.7 percent on Wednesday.
According to the Bakheet Financial Advisors, the commission’s decision to conduct an investigation on the reasons of what happened “reflected seriousness to strengthen market confidence and improve efficiency amid high transparency environment”.
“It was a right decision because there was no significant news affecting the financial standing of SEC, considered to be the most attractive speculative stock because of its low price versus other stocks,” BFA said.
BFA expected the investigation of the sudden SEC rise to “reflect on other speculative stocks”. “However, BFA said, the performance of other blue chips and financially sound companies “will continue to reflect their increasing profits”.
Kuwait’s KSE all-share price index gained 0.06 percent this week, to close at 6,255.1 points, up from 6,216.6 points in the previous week.
Egypt’s Hermes price index also gained 2.75 percent, closing week on Thursday at 23,130 points, compared with last week’s close at 22,512 points.