RIYADH/DUBAI, 15 May 2006 — Saudi stocks leapt 7.26 percent yesterday as Gulf markets extended a rebound sparked by Riyadh’s decision to replace an unpopular market regulator, but Dubai dipped and analysts said any rally could be short-lived.
Gulf Arab share market prices rose on Saturday after Custodian of the Two Holy Mosques King Abdullah appointed a new head of the Capital Market Authority, replacing Jammaz Al-Suhaimi, who had borne the brunt of public outrage over a crash that has halved the value of Saudi market.
Other markets have also slumped this year, but took their cue from Riyadh yesterday with Abu Dhabi closing 1.92 percent up, Qatar jumping 4.79 percent and Bahrain, the least liquid market, gaining almost 1 percent. But analysts warned the rally could soon fizzle out, saying nothing had changed the factors that precipitated the crash — Saudis with little understanding of markets borrowing heavily to buy poor quality stocks at astronomical prices.
Yesterday’s trading in Dubai suggested the initial euphoria was beginning to wane. The main index closed 1.26 percent lower at 501.40 points, having been more than 6 percent up in early trading. “Sentiment was not strong enough to sustain the rally. There were a lot of people looking to sell and book some of the gains from yesterday,” said Hany Hussein, a portfolio manager at Mashreqbank in Dubai.
In contrast the main index of the Saudi bourse, the Arab world’s largest, closed at 11,837.26 points, up 7.26 percent. It rose as high as 12,080.79 points soon after trading opened. The two largest listed firms Saudi Basic Industries Corp. (SABIC) and Saudi Telecom Co. (STC) closed up almost the maximum 10 percent allowed in a single day.
Samba Financial Group was the most heavily traded stock falling 5.5 percent after leading Saturday’s rally with a near-10 percent rise.
Turnover surged to SR10.2 billion ($2.72 billion) yesterday.