RIYADH, 4 June 2006 — Saudi shares edged up in active dealings yesterday as a plan to slash brokerage commissions boosted liquidity in the market. The Tadawul All-Share Index closed up 0.24 percent at 11,639.20 points after seesawing between a rise of 2.9 percent and a loss of 0.8 percent as investors pocketed blue-chip gains.
Turnover amounted to SR25.8 billion ($6.9 billion), up from an average of about SR17 billion last week. The bourse regulator has announced plans to cut trading commissions by 20 percent as of June 17. The measure would also allow investors to negotiate further discounts.
“The measures announced on Thursday have prompted major speculators to sell blue chips and opt for lower-grade or speculative stocks, which offer much bigger profit potential,” a senior trader said.
The move is expected to boost trading on small capitalizations, popular among retail investors, most of whom lack basic market knowledge, he said. “The narrow investment mentality which prevails in the market coupled with the index nearing the 12,000-point resistance (level) have led to this shift.”
Traders have been expecting the Arab world’s largest bourse to decline after it clocked a near-12 percent rise in the week ending Thursday.
Of the total 80 listed firms, 68 rose and 9 declined.
Saudi Electricity Co. gained 6.85 percent to SR19.50 after it topped both traded volumes and turnover with 76.53 million shares generating SR1.48 billion. Industrial firm Fipco was the second most active stock in terms of value with shares worth SR1.13 billion changing hands. It closed up 4.18 percent at SR193.25.
Largest-listed firm Saudi Basic Industries Corp. (SABIC) fell 3.25 percent to SR156.25. Yanbu Cement slid 1.7 percent to SR101.