RIYADH, 30 May 2006 — Saudi shares rose nearly three percent yesterday, fueled mainly by bargain-hunting on blue chips after a recent crash reduced their valuation ratios to their lowest levels in years. The all-share index closed 2.87 percent higher at 10,519.77 points, close to its peak of the day. Total volume stood at 361.08 million shares generating SR20.04 billion ($5.34 billion) turnover, but was largely led by small capitalizations. “We had a great market today, for once in a long while we saw a couple of blue chips among the top traded stocks,” a senior trader said.
Market heavyweight Saudi Basic Industries Corp (SABIC) led turnover with SR1 billion worth of shares changing hands. The stock trades at 16.8 times 2005 earnings. “But today’s rise looks to be part of the cyclic trend in the index movement, whereby we see sharp rises until the resistance 12,000 points and then an even faster profit-taking pattern,” the trader added.
The Arab world’s largest bourse has lost more than half of its capitalization since the crash started in late-February. Analysts say it was a belated correction, after a 600 percent rally in the previous three years, but was worsened by a power struggle between speculators and market regulators.
Of the 80 listed companies, 55 rose and 18 declined. The best performer of the day was Saudi Public Transport Co. rising 9.86 percent on 24.28 million shares, or nearly a quarter of its total shares.