JEDDAH, 8 April 2006 — The splitting of shares in three sectors in Saudi Arabia — agriculture, insurance and services — pushed the Tadawul All-Share Index (TASI) up by 3.5 percent last week, which closed on Wednesday at 17,665.07 points, compared to 17,060.34 points in the previous week.
The Saudi stock market was closed on Thursday to make arrangements for a 5-to-1 share split of telecom and banking stocks.
The TASI is currently 5.70 percent higher that the year’s start.
The Riyadh-based Bakheet Financial Advisors (BFA) attributed the benchmark price gain last week to a 25-percent rise in the prices of speculative stocks of the agriculture and insurance sectors that witnessed strong demand. The Capital Market Authority (CMA) intended to split more stocks in the coming week.
“It seems that investors’ misunderstanding of the idea behind the splitting of stocks had led to this heavy speculation,” the BFA said in a statement.
They expected the Saudi market, the Arab world’s largest bourse, to take “a wait-and-see approach while investors re-evaluate their positions in the light of the Q1 results”.
The stock market turnover, however, more than doubled to SR110.39 billion last week compared to SR50.42 billion in the previous week.
Saudi Telecom Co. shares were most active by value last week at SR11.23 billion as its shares gained 8.56 percent to close at SR1,180, followed by Saudi Basic Industries Corp. (SABIC) at SR7.29 billion despite its shares declined 5.89 percent last week to close on Wednesday at SR1,550. Al-Rajhi Bank shares rose slightly at SR2,550 with value of traded shares reached SR7.14 billion last week.
Kuwait’s KSE all-share price index climbed 6.1 percent last week, closing at 10,508 points up from 9,897 points in the previous week.
Kuwaiti shares apparently drew momentum from reports about the huge petrodollar surpluses the oil-rich emirate expected this year due to the soaring crude prices, an Amman-based analyst said.
The all-share price index of the United Arab Emirates bourses of Dubai and Abu Dhabi gained 3.2 percent last week, closing at 5,983 points, up from previous week’s close at 5,800 points.
Egypt’s Hermes all-share price index gained 4.4 percent last week, to close at 60,436.50 points, compared with previous week’s close at 57,776 points.
Meanwhile, Arab stock markets are expected to move sideways in the coming couple of weeks amid expectations that the first quarter results could be negatively affected by a series of declines that hit most regional bourses over the past two months, financial analysts said yesterday.
They told Arab News that speculation would continue as the “key moving factor” with measures taken by certain governments to shore up prices having only short-lived positive impact on markets.
“I believe the first quarter results will not match those realized in 2005, particularly for firms which depend mostly on non-operative profits,” said Nabil Daaboub, head of trading at the Atlas Investment Group, the Arab Bank’s investment arm.
“Therefore, I think the downward trend will prevail in the coming weeks, despite gains scored by some bourses this week,” he added. Daaboub expected no tangible effect on Middle East stocks as a result of interest rate hikes adopted this week by some regional central banks to match a similar rise in the dollar rates.
“The response to such interest rate movements is not so clear in the Arab world as it is the case in financially sophisticated markets of industrialized nations,” he said. Volatility continued to characterize the Amman Stock Exchange last week with most investors preferring to stay on the sidelines awaiting new clues.
The ASE All-Share Price Index gained 0.83 percent this week, closing on Thursday at 7,129 points, up from 7,070 points last week, according to the market’s weekly report. The market’s daily turnover dropped 26 percent, to $53 million from $82 million in the previous week.
“The low turnover apparently reflected cautiousness on the part of investors who preferred to stick to their stock holdings at this juncture,” Daaboub said.