JEDDAH, 6 March 2005 — Saudi shares climbed more than 2 percent to a new record high yesterday, powered by rising oil prices and a strong industrial sector.

The official Tadawul All Share Index (TASI) ended the day at 9,318.74 points, up 2.13 percent on last week’s close. It had risen as high as 9,328 during the day.

The stock market is likely to remain firm in the short to medium term helped by the intention of the government to diversify its economy and opening up sectors such as telecom, banking and real estate. The primary market is abuzz with new issues slated to come in 2005 and this will complement the secondary markets in terms of the increased market depth and rise in trading volumes.

“It’s basically oil which is driving the market,” said an analyst with a leading Saudi bank.

Petrochemical giant Saudi Basic Industries Corp. (SABIC) rose sharply, gaining 4.65 percent to SR1,306 ($348.3). The firm, which reported a doubling of net profits last year to SR14.25 billion, has seen its share price quadruple since January last year, when it stood at SR321.

“The energy story looks like it’s going to continue for a while,” said an analyst with another Saudi bank, adding investor demand for petrochemical firms was strong.

Insurance firm National Company for Cooperative Insurance (NCCI) also rose sharply, gaining 4.33 percent to SR439.75. Overall 47 shares rose and 24 fell in trade worth a total of SR11.7 billion.

The Saudi stock market has continued to grow at a phenomenal pace. The TASI ended the year 2004 at 8,206.23 points, recording a phenomenal growth of 84.9 percent and outperforming the growth of 76.2 percent recorded in the previous year.

The Saudi stock market has been among the top-performing markets in the Middle East region. This is attributed to the remarkable corporate performance, high liquidity due to high oil price scenario, positive business and consumer sentiments and increased stability in the region.

The low interest rates on the bank deposits have also turned investors toward the stock market in search of better returns. It was further helped by the encouraging stances shown by the government and private companies to go in for listing and unlock the value of their investment. The government has done a commendable job and the initial public offerings (IPOs) of Saudi Arabia’s top companies, the state-owned NCCI, Sahara Petrochemical and Ettihad Etisalat were quite successful and many more are in the pipeline in 2005.

The strong investors’ interest in the primary market complemented the secondary markets as well and Saudi stocks evinced huge investors’ interest as seen from the big spurt in the volume and value of the share traded on the exchange, according to the Kuwait-based Global Investment House (GIH).

Industry sector index registered a whopping 150 percent growth in 2004 as compared to the last year. Agriculture sector index also performed very well in 2004, increasing by 111.8 percent over last year. Banking sector index, which dominates the market increased by 97.1 percent.

However, the big story this year has been the level of oversubscription and investors interest seen in the IPOs in the Saudi market.

The IPOs of these companies witnessed huge oversubscription level with Sahara Petrochemical IPO oversubscribed by 125 times, raising a record $37.5 billion.

The IPO of Ettihad Etisalat, the second telecom operator too was oversubscribed 51 times. The IPO of NCCI was oversubscribed 11.5 times.

The market capitalization of the TASI increased by 94.5 percent in 2004 and crossed the SR1 trillion mark. The market capitalization at the end of 2004 stood at SR1,147.4 billion ($305.9 billion).

Among the companies, SABIC had the highest market capitalization at the end of 2004, SR268.5 billion constituting 23.4 percent of the total market capitalization. It was followed by Saudi Telecommunications Company (STC) and Saudi Electricity Company (SEC) with the market capitalization of SR190.6 billion and SR111.25 billion respectively.

Among the banking sector, Al-Rajhi Banking & Investment Corp. led the sector with the market capitalization of SR90.2 billion as on December-end 2004.

The value of the share traded in 2004 amounted to SR1,773.9 billion, an increase of 197.4 percent over 2003. The industry sector accounted for the highest value in the shares traded (SR624.6 billion) followed by the services sector (SR547.2 billion) and the Electricity sector (SR211.1 billion). Agriculture sector showed the highest jump in the value of shares traded, increasing by 1480.7 percent in 2004, followed by the services sector, which increased by 273.3 percent in 2004.

Among the individual stocks, Saudi Electricity Company led the market in term of the value of shares traded (SR211.1 billion) followed by STC (SR157 billion) and SABIC (SR125.28 billion).