JEDDAH, 1 May 2005 — Bank Albilad shares soared to SR850.25 ($227) on the first day of trading yesterday, 17 times their original subscription value of SR50.

More than half of the Kingdom’s 16.5 million native population applied for shares in the Islamic bank’s initial public offering (IPO) last month, receiving on average less than four shares each.

Shares opened at SR750 and rose as high as SR950 during a busy trading day — there were more than 50,000 transactions — before closing the morning session at SR850.25. They closed the day at SR765 with 1.9 million shares changing hands in over 100,000 transactions.

The Tadawul All-Share Index (TASI) closed yesterday at 11,246.55, down 297.35 points or 2.58 percent from Thursday’s close of 11,543.90 points.

“I think the shares will trade around these levels until the bank comes out with second quarter results,” said Younis Malick, senior economist at the National Commercial Bank. “This will be a consolidation phase.”

Riyad Bank Chief Economist Khan H. Zahid told Arab News that “the initial price of SR50 per Albilad share was too low and those who missed an opportunity to buy shares when the IPO was launched in early March are now rushing to buy the shares.”

He said: “The tidal wave of liquidity is making the stock market more vibrant as prices of stocks are shooting up. Due to ample liquidity, more and more people are entering the stock market.”

However, Zahid said the recent fall in oil prices will not have any impact on the stock market. “This is just a temporary fall,” he said.

Matshar Al-Murshid, financial analyst and member of the Saudi Economic Society, said he had expected a big demand for Albilad shares on the first day of its launch in the market. However, he downplayed suggestions that the arrival of Albilad shares would affect the prices of other shares.

He said the Saudi stock market was capable of accommodating more IPOs because of ample liquidity available in the Kingdom. Albilad’s IPO attracted more than eight million Saudis as its shares were oversubscribed several times. Most of them went after Albilad’s shares in a big way after learning about its Islamic banking services.

Dr. Yaseen Al-Jefry, another analyst, said he believed that most subscribers would sell their shares on the first days of exchange.

The Capital Market Authority (CMA), however, did not fix any price for the bank’s shares, leaving the issue to the demand-and-supply factor.

Albilad, established following the merger of eight local money exchange companies, is Saudi Arabia’s 11th bank and the second Islamic bank after Al-Rajhi Banking and Investment Corp. “Saudi Arabia is a big country so there is a huge potential for us,” Chief Executive Officer Azzam Abaalkhail said recently.

The bank aims to have 31 branches across the country by the end of the year and 120 to 130 within five years.

Bank Albilad’s share offer was one of a series of high profile IPOs so far this year in the world’s biggest oil exporter, which is flush with cash from high crude prices.

The government sold off its majority stake in the National Company for Cooperative Insurance in January and Saudi Dairy and Foodstuff Company is currently offering 1.95 million shares, or 30 percent of its capital. All the issues have been heavily bought.