JEDDAH, 5 January 2006 — Saudi stocks continued their relentless surge and hit a new record high yesterday. The 1,941.96 points increase in the Industrial index, sent the Tadawul All-Share Index (TASI) near the 17,500 mark. The TASI index closed 314.37 points higher at 17,498.99.
The index is up 4.71 percent in four days.
Analysts said the Saudi stock market would keep its upward momentum in the near future as the listed companies started announcing their results.
The industrial index closed at 43,644.23 points. Saudi Basic Industries Corp. (SABIC) shares jumped 6.70 percent yesterday to close at SR1,720. Saudi Arabia Refineries Co. shares soared 10 percent to SR4,942.25 yesterday.
The Banking Index rose slightly at 41,947.90 despite a 10 percent plunge in Bank AlJazira shares at SR1,669.50. Shares of Riyad Bank, The Saudi Investment Bank and Saudi Hollandi Bank also fell yesterday.
In the cement sector, shares of Eastern Cement jumped 9.98 percent to SR958.50, followed by Saudi Cement by 4.79 percent to SR771.50. However, shares of Arab Cement, Yamamah Cement and Qassim Cement declined.
The services sector was in a negative territory as shares of only the National Shipping Company of Saudi Arabia, Saudi Public Transport Co. and Tihama Advertising and Public Relations Co. rose while the rest of the stocks dropped yesterday.
Saudi Electricity Co. shares fell to SR152.
Saudi Telecom Co. and Etihad Etisalat share rose yesterday to SR981 and SR727.50, respectively.
The Agriculture Index was in the red yesterday. Shares of only National Agriculture Development Co. and Bishah Agriculture edged higher while shares of other companies declined yesterday.
The value of traded shares fell yesterday to SR25.75 billion from Tuesday’s SR29.88 billion.
Meanwhile, Said Al-Shaikh, chief economist at the National Commercial Bank (NCB) said stock markets in the Gulf region to continue to accomplish high profits in 2006, with corrective steps from time to time.
Al-Shaikh told the seminar held in Kuwait recently under the sponsorship of the National Kuwait Bank, titled “Gulf Stock Market. Boom or Bubble?”, that the fundamental causes of the boom are strong demand from China, India and the US suggesting the outlook for the oil sector and the region’s economies will remain favorable. He also said that the “stock market profits of the past two years will be difficult to repeat.”
Despite the rosy economic outlook, Al-Shaikh cautioned that the high share price-to-earnings ratios are cause for concern, particularly in Saudi Arabia and the United Arab Emirates, where the trailing ratios (using last four quarters of earnings) have climbed to 33.6 and 31.2 respectively. Al-Shaikh added that speeding up the initial public offering process would reduce market pressure because there would be more shares to absorb liquidity. To reduce pressure on stock markets, government should allow companies to develop corporate bonds.