RIYADH, 6 March 2006 — Saudi shares closed 2.29 percent higher yesterday as institutional investors snapped up blue-chip stocks after a sharp week-long correction. The Tadawul All-Share Index (TASI) ended at 17,978.35 points on a turnover of SR22.9 billion ($6.1 billion) about three times more than Saturday’s SR7.7 billion but about half of daily volumes recorded throughout much of this year. Thirty mainly blue-chip stocks rose and 48 declined, while on Saturday all stocks had ended in the red. Heavyweights Saudi Electricity Co., Saudi Basic Industries Corp. (SABIC) and Saudi Telecom Co. (STC) were among the most actively traded shares. “It’s a healthy run up on active trade. Big funds are buying mainly blue-chip stocks,” said Abdelmounaim Addas of Abalkhair Financial Consultancy. “There is a great appetite for SABIC, STC and other blue-chip stocks. We saw huge buys on SABIC, blocs of 30,000 shares going in a blink of an eye,” the veteran trader said.
Up to Saturday, the widely expected correction had trimmed the Arab world’s largest bourse’s capitalization by some 15 percent. Before the correction started last Sunday, the bourse had gained some 20 percent this year alone due mainly to rising liquidity and speculation. Before the correction, the index had risen 600 percent since late 2002 on the back of record oil receipts and improved macroeconomic outlook.
The index began the rebound 15 minutes after trade opened when it hit a low for the day of 16,928 points, erasing all gains this year. “The index has finally found a support level which corresponds exactly to where it was at the beginning of the year,” Addas said.
Hisham Abu Jamea, chief financial analyst for Bakheet Financial Advisors (BFA) agreed. “It was the turning point for the market ... Investors had to reassess their portfolios after the exaggerated euphoria.” He said speculative stocks that have been fuelling the rise are set to continue declining after losing up to half of their value in the correction while investors focus on blue-chips.