JEDDAH, 6 May 2006 — Saudi stocks plummeted further last week despite good first quarter results reported by several leading firms.

The Tadawul All-Share Index (TASI) shed 6.1 percent, closing week at 12,751.39 points. TASI is currently 23.7 percent lower than the year’s start.

According to the weekly report of the Riyadh-based Bakheet Financial Advisors (BFA), “The Saudi stock market continued its sharp fluctuations amid profit-taking on investment stocks and heavy speculation on stocks of companies with weak financial indicators.”

“It seems that many investors are concerned about the probability of fresh sharp market retreats despite a number of positive factors for the listed companies, especially investment firms,” it added.

The BFA expected the Saudi stock exchange to “continue its volatility due to hastily profit booking by some investors, and heavy speculation by others”. On Thursday, TASI closed 301.93 points or 2.31 percent down from Wednesday’s closing.

The stock market turnover reached SR9.71 billion on Thursday.

According to Rashid Al-Fowzan, a financial analyst, the market would continue to witness fluctuations within the range of 150 to 250 points by the middle of June. He also predicted that the index could rise up to 13,500 points or fall to 12,500 during this period.

Dr. Abid Al-Abdali, an economist at Um Al-Qura University in Makkah, said he believed that the index would receive a big boost within two months, when traders would be compensated for their losses. He predicted that the index could reach 20,000 points by the end of this year. However, Dr. Osama Falali of King Abdul Aziz University in Jeddah, said many traders were thinking of leaving the market due to sharp fluctuations. “As a result there are more supply than demand,” he pointed out. He said the market was in an unpredictable situation. “We have seen unusual rise of the index in the past. We are now witnessing unusual decline,” he explained.

Arab stock markets are expected to retain their volatility in the short term as long as “speculation” remained the main driving force in regional markets, financial analyst said yesterday.

They told Arab News that the Saudi stock exchange would continue to affect neighboring bourses due to the fact that several Saudi funds were operating at the same time in other Arab markets, particularly the bourses of Dubai and Kuwait.

However, some analysts believed that surging oil prices and the subsequent expansion in surplus petrodollars accruing to Saudi Arabia and other Gulf producers would provide an impetus to regional markets in the long run.

“I believe volatility and speculation will continue to characterize regional markets in the coming weeks,” said Wajdi Makhamreh, investment manager and head of trading at the Jordan Investment & Finance Bank.

“Performance at the Saudi stock exchange, the Arab world’s largest bourse, will continue to reflect, albeit in an indirect manner, on other Arab bourses, given the fact that many Saudi investors are operating at more than one market at the same time,” he added.

Jordanian shares also fluctuated violently last week with speculation running high on the heavyweight Arab Bank as well as investment, services and real estate stocks.

The all-share price index of the Amman Stock Exchange edged higher last week closing at 7,051 points on Thursday, which represents a 0.16 percent gain over last week’s close, according to the ASE weekly report.

“Traders are again committing the same mistakes of focusing on investment and real estate stocks, driven by the desire to score fast gains,” Makhamreh said.

“Regrettably, investors are ignoring the core business firms, the same trend that was behind the deep decline in prices of Jordanian stocks over the past two months,” he added.

He believed a lot of money was arriving in Jordan from Gulf states, lured by low prices of Jordanian stocks.

“I think regional stock markets, including the ASE, stand to gain from the soaring oil prices and the huge income surpluses due to accrue to Gulf countries this year,” he said.

Kuwait’s KSE all-share price index shed 1.3 percent, closing week at 10,197 points down from 10,326 points last week.

The all-share price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi fell 5.4 percent last week, to close on Thursday at 4,869 points. The UAE benchmark price is currently 28.8 percent lower than the year’s start.

Analysts said this week’s retreated happened despite news of a meeting of portfolio managers to come up with new strategies for shoring up prices.

Egypt’s Hermes all-share price index shed 1.1 percent to close on Thursday at 57,205.4 points in what analysts described as a profit-taking move that prepares for a rebound. — With input from Abdul Jalil Mustafa