JEDDAH/AMMAN, 27 May 2006 — The bearish trend returned to the Saudi stock market last week, erasing most of previous week’s gains. The Tadawul All-Share Index (TASI) fell 5.98 percent or 661.07 points last week, closing on Thursday at 10,385.48 points, compared to previous week’s close at 11,046.55 points. The stock market turnover, however, increased to SR93.71 billion last week compared to SR71.39 billion in the previous week.
The Saudi Capital Market Authority announced series of measures last week such as the formation of a capital market company, the setting up of independent investment funds and the establishment of a new stock exchange system to strengthen the stock market which has fallen nearly 40 percent so far this year after rising 103 percent in 2005.
“The current level of stock prices, particularly the investment-grade companies, is considered attractive but the psychological mood has a major effect” of investors, who are obsessed with fears of further declines, the Riyadh-based Bakheet Financial Advisors said in a weekly report.
The report pointed out that the current market prices do not reflect the “positive indicators” of the national economy and the soaring oil prices. The BFA report expected the market’s “volatility to ease” in the coming weeks as investors monitor the corporate profits in the second quarter of the year.
Kuwait’s KSE all-share price index gained 2.4 percent last week after last week’s turmoil, to close at 9,631 points up from 9,400 points in the previous week. The unified all-share price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi edged lower last week closing on Thursday at 4,464 points compared with previous week’s close at 4,489 points.
Meanwhile, Arab stock markets were the scene of cautious trading this week following the record plunges over the past couple of months that forced investors to opt for “speedy profit taking” and refrain from long term transactions, financial analysts said yesterday. However, they expected gradual rebounds at most of regional bourses in the coming two weeks in anticipation of what is largely perceived as good second quarter results.
“I believe markets will be active in the coming couple of weeks as investors await the second quarter results which are expected to be better than the first quarter,” Wajdi Makhamreh, director of investment and head of brokerage at the Jordan Finance & Investment Bank, told Arab News.
“Each Arab market has its own peculiar conditions, but in general traders recently pursued a short-breath strategy, whereby they preferred speedy profits without longer-term commitments,” he said.
—With input from Abdul Jalil Mustafa