AMMAN, 26 February 2005 — Arab stock markets continued to rally this week, but analysts said yesterday they expected “deep profit-taking” before a new jump at the end of March ahead of the Q1 results.
“All fundamentals indicate that Arab stock markets still have strong potential, but the distribution of 2004 dividends in the coming couple of weeks and latest sharp rise in prices will inevitably give rise to deep profit-taking early in March,” Wajdi Makhamreh, investment manager and head of brokerage at the Jordan Investment & Finance Bank, told Arab News. “However, a fresh jump is expected at the end of March, when investors turn their attention to the quarter 1 profits,” he said.
Makhamreh and other portfolio managers pointed out that stocks were “receiving support from the relative stability emerging in Iraq and the advancing political process in the Palestinian territories”.
The Amman Stock Exchange all-share price index jumped 4.56 percent in the week ending Thursday, to close at 4,954 points, up from 4,738 points last week, according to the ASE weekly report.
Analysts attributed the active trading to the good results posted by blue-chip firms in 2004, the existence of local and foreign funds seeking investment, the government’s privatization drive and low interest rates on the Jordanian dinar.
Saudi stocks also rallied this week, with the Tadawul All Shares Index (TASI) of the largest Arab bourse gaining 0.9 percent and closing at a new record high of 8,867.45 points, according to the Bakheet Financial Advisors.
“The market was pushed mainly by the Saudi Electricity Co. which gained 6.3 percent on the company’s announcement of setting up a new subsidiary to operate its energy transport business,” the BFA said in their weekly report.
The Saudi shares also drew support from the surging oil prices, which indicated larger revenues for the world’s top crude exporter, the report added.
However, the BFA expected a downward correction in share prices in the coming couple of weeks due to the payment of dividends.
“This technical retreat is expected to be slight and should not negatively reflect a decline in stock prices,” the report said. Barring any sharp decline in oil prices “the index trend is expected to be positive,” it added.
Kuwaiti stocks rebounded this week after a retreat that lasted for the previous three weeks against the background of security concerns emanating from clashes between Kuwaiti troops and Islamic militants.
The KSE all-share price index gained 3.8 percent, to close trading week at 6,632.6 points compared to last week’s close at 6,389.3 points. The Kuwaiti bourse will be closed on Saturday and Sunday to mark the National Day.