JEDDAH, 7 May 2006 — After falling 6.1 percent last week, the Saudi stock market continued its downward trend yesterday. The Tadawul All-Share Index (TASI) plunged 1,223.58 points or 9.6 percent — its sharpest daily fall on record according to Reuters data which goes back to 1998. The index closed at 11,527.81, accelerating selling around the Gulf region and signaling more trouble ahead for bourses trying to pull out of a deep correction.

Stocks in Dubai fell nearly 5 percent with Kuwait, the second largest Arab market, down 1.38 percent. Abu Dhabi also fell, while smaller regional markets were closed. “There was no reason for this fall, so it may have been a large fund or major investors behind this... (deliberately selling low) hoping to make profits in the coming days,” said analyst Turki Fadak of the Saudi Economic Association.

“The market is behaving with a herd mentality. Everything went down today without any differentiation between good or bad stocks. There was just a psychology of selling, a lack of confidence,” Fadak said.

Over SR9.9 billion worth of stocks changed hands yesterday, much lower than daily trading before a crash since February when big speculators pulled out of the market after regulators tried to impose order.

Out of 79 stocks traded, only one was up while shares of all other listed companies declined yesterday. The shares of lone gainer National Gypsum Co. went up 7.95 percent to SR176.50.

The Saudi stock market has lost more than 40 percent of its value in the correction, driven by concerns about overvaluation. It has dragged down regional markets, with Saudi investors selling in other bourses to meet margin calls at home.

A number of Saudi stock market experts blamed speculators for the recurrent decline of the index in recent weeks.

Ali Taqi, senior investment manager at National Bank of Kuwait, estimated the Saudi bourse is trading on around 22 times 2006 earnings, down from about 35 at the end of last year.

The Banking Index lost 3,510.64 points to 34,327.34 as shares of all banks hit very badly. Al-Rajhi Bank shares dived 10 percent to SR301.50.

Jamal Al-Zahrani, an investor in the market, accused both speculators and bankers for the present market crisis. “There is lack of supervision on banks as they work to realize their interests and hide information from dealers,” he said.

The Industrial index dropped 2,618.31 points to 24,168.34. Shares of Saudi Basic Industries Corp. fell 9.97 percent to SR160.25.

In the telecom sector, shares of Saudi Telecom Co. and Etihad Etisalat declined 9.92 percent to SR113.50 and 10 percent to SR78.75, respectively. The Telecom index closed at 4,333.35, down 477.87 points.

Saudi Electricity Co. (SEC) shares fell 9.21 percent to SR17.25.

The cement and agriculture stocks were also in the red.

— With input from Reuters