AMMAN, 7 May 2005 — Most of Arab stock markets slipped this week in profit-taking corrections, but analysts said yesterday regional bourses were apparently passing through a “consolidation phase” prior to fresh rebound.
“Markets have gone through deep corrections, but we believe stocks are currently in a consolidation phase prior to a new round of gains,” Saqr Abdul Fattah, Investment Manager at the Housing Bank for Trade and Finance, told Arab News.
“There is a lot of liquidity in the market and investment funds are building up new positions in accordance with first quarter results of firms,” he said.
Analysts also predicted no tangible effect on Arab stock markets as a result of hiking regional basic interest rates by a quarter percentage point to match a similar rise of the US dollar rates.
The Amman Stock Exchange’s all-share price index shed 4.28 percent in the week ending Thursday, closing at 6,521 points down from last week’s close at 6,813 points, according to the ASE weekly report. The drop was led by the heavyweight Arab Bank that accounts for about 40 percent of the market’s capitalization.
“We believe the downward correction is over and we are now in a safe territory before new rebound,” a portfolio manager said.
The Saudi stock market witnessed “volatility” this week that echoed fluctuations of oil prices on the world market, according to the weekly report of the Bakheet Financial Advisors (BFA).
The Tadawul All-Share Index (TASI) of the Arab world’s largest bourse slipped by 2.5 percent to close on Thursday at 11,259.89 points. “TASI is currently 37.2 percent higher that it was at the start of the year,” BFA said.
“In view of persistent fluctuations in oil prices, future trend of the Saudi stock market remains unclear and difficult to predict,” they added. Saudi Arabia is the world’s largest oil exporter.
Kuwait’s KSE all-share price index also dropped 0.7 percent this week, to close at 8,577 points, compared with 8,639 points last week.
“Kuwaiti shares were apparently affected by the Central Bank of Kuwait’s decision to hike the dinar interest rate by 0.25 percentage point to cope with a similar hike by the US Federal Reserve,” an Amman-based analyst said.
“However, we believe the impact of interest rate rises will be short-lived because interest rates are still generally low in Kuwait and neighboring countries,” he added.
Stock markets of the United Arab Emirates also this week witnessed downward corrections, the first in several months, with all-share indices shedding an average of 6 percent.
Abu Dhabi Stock Exchange slipped by 8.8 percent, while Dubai Exchange was down 3.8 percent.
“We believe correction is over, as low prices will provide buying opportunity to investors,” said Zuhair Kiswani from Al-Sharhan Brokerage Co.