JEDDAH, 29 March 2006 — Saudi stocks kept their upward march yesterday and surged 4.93 percent after rising 4.03 percent on Monday as investors welcomed the announcements by the Capital Market Authority (CMA), the stock market regulator, on share-splitting and the reintroduction of a 10-percent trading band for share-price fluctuations.
The Tadawul All-Share Index (TASI) edged higher by 767.27 points to 16,315.06 yesterday.
All 79 stocks made hefty gains. Over SR9.45 billion worth of shares changed hands compared to SR15.93 billion on Monday.
Financial experts said some 40 companies would float their shares in initial public offerings (IPOs) in the next two years. They estimated the new IPOs at between SR30 billion and SR35 billion.
Basil Al-Ghalayini, chief executive officer of BMG Financial Advisors, said some 12 Saudi companies, including three family businesses, would float their shares this year for public subscription.
Al-Ghalayini and other experts emphasized that the new measures taken by Custodian of the Two Holy Mosques King Abdullah, including opening up of the stock market to foreign residents and reducing value of share prices from SR50 to SR10, would strengthen the market and reduce the intensity of speculation.
Commenting on the recent correction of regional stock markets, Henry Azzam, chairman of Dubai International Financial Exchange (DIFX), said the drop in some markets was “well justified” in response to extended valuations. Azzam, speaking at MEED’s IPO and Asset Management Middle East conference in Dubai on Monday, said the market correction had been “exacerbated by panic among the retail investors.”
“Investors now lack the ‘blind’ confidence that fueled the market momentum between 2002 and 2005,” he said.