AMMAN, 1 January 2005 — Arab stock markets are expected to rally further in 2005, buoyed by strong blue chip profits, soaring oil prices, excellent macroeconomic indicators and a possible improvement in regional geopolitics, prominent financial analysts told Arab News yesterday.

“I believe Arab bourses will witness a fresh rally in January and the first half of February against the backdrop of strong profits, rising oil prices and the excellent macroeconomic indicators in respective countries,” said Wajdi Makhamreh, investment manager and head of brokerage at the Jordan Investment & Finance Bank.

“I think the oil boom has given rise to huge surplus petrodollars seeking investment in regional markets. This found investment outlets in Gulf bourses and other Arab share markets including the Amman Stock Exchange,” he added.

Makhamreh spoke against the background of vigorous showing by regional bourses in 2004 that found expression in a 32 percent rise in share prices in Kuwait, 62 percent in Jordan, 85 percent in Saudi Arabia and 105 percent in Egypt.

“We also believe that Arab stock exchanges will derive momentum from what looks to be an improving geopolitics in the area as preparations go ahead for polls in the Palestinian territories and Iraq,” he said.

The optimistic viewpoint was also voiced by Saqr Abdul Fattah, investment manager at the Housing Bank for Trade and Finance. “I am really upbeat over the expected performance of Arab stock markets in the new year,” he said. “I believe the region is heading to a new era with Iraq’s reconstruction and soaring oil prices representing a catalyst for regional investment. This will have its positive spillovers on stock markets, “ he added.

Jordan’s ASE all-share price index gained 2.3 percent in the week ending Thursday, to close at 4,246 points up from 4,149 points last week, according to the market’s weekly report. The industrial sector index led trading, rising by 7.67 percent, propelled by better-than-expected dividend distributions for 2004, a portfolio manager said.

The banking sector index retreated 0.21 percent, pushed down by the Arab Bank share, which slipped on reports of a $800 million compensation suit filed against the bank in New York. The Saudi stock exchange’s all-share price index gained 0.9 percent this week, closing on Thursday at 8,206.23 points, according to the market’s weekly report.

The Saudi Arabian Basic Industries Co. (SABIC) and the Saudi Telecom Co. (STC) advanced 3.1 percent and 0.6 percent respectively, the report said.

Dealers expected the Saudi stock exchange to rally in January, propelled by expected blue chip gains and rising oil prices.

In Kuwait, the KSE benchmark price edged lower closing at 6,409.5 points, compared with last week’s close at 6,437.9 points.

The Kuwaiti bourse witnessed for the third week in a row profit-taking moves as part of tidying up portfolios by investors ahead of the new year, an Amman-based analyst said.

“We expect the upward trend to continue in 2005 but at a lower pace than 2004, as investors are expected to be more selective,” he added. Egypt’s Hermes price index climbed 1.52 percent this week, to close 2004 at 23,893 points on Thursday. The closing represents a 105 percent rise since the beginning of the year, dealers said.