RIYADH, 8 June 2006 — Saudi shares closed down 8.17 percent yesterday, in what traders said was strong profit-taking after a nine-day bull run. The all-share index ended at 11,408.07 points, only a few points above its lowest level of the day. The index has gained more than 20 percent since late-May to hit a month peak on Tuesday.
“The index rose too sharply without a reprieve to allow it to stabilize at a certain level... Traders feel comfortable once the index rises above 10,000 points and pour money on small caps,” said Mazen Baghdadi, chief portfolio manager for Riyad Bank. “The problem is that the pace of the fall is faster than the rise,” he added.
The recent rally was fueled by expectations that more money would find its way to the Arab world’s largest bourse once the bourse regulator lowers commissions by 20 percent on June 17.
“People started to reap profit today after the recent rise which doubled the prices of some small caps,” said Abdelmounaim Addas of Zad Investment.
“Let’s hope it does not take the index below 11,200 points, because this will be very worrying... But I don’t think it will happen,” Addas said. “There was healthy appetite for buying today mainly for Saudi Electricity and some small cap, the same firms on which profit-taking started,” he added.
All but one listed stock fell. About 453 million shares worth SR27.13 billion ($7.23 billion) changed hands. Turnover fell 10 percent from Tuesday.
Saudi Electricity led trade with SR2.06 billion and 92.34 million shares before it closed down 10 percent down at SR20.25 after it had led the market’s rally.
Largest-listed firm Saudi Basic Industries Corp. (SABIC) also fell by nearly the 10 percent single-day limit closing 9.88 percent lower at SR152.75. Saudi Telecom (STC) shed 8.14 percent to SR110 while rival mobile operator Mobily plunged 10 percent to SR81.
Meanwhile, Saudi Arabia has named Abdul-Mohsen Al-Fares as chief executive of a giant bank it plans to float this year, state media said yesterday. Banking sources told Reuters last month that Al-Fares, a former Finance Ministry official and tax expert, would head the Development Bank, which will be the biggest Saudi bank with a capital of SR15 billion ($4 billion).
State media said the bank’s founding committee has chosen Al-Fares who has worked in the Saudi central bank, and was board member of several institutions and companies such as the Islamic Development Bank (IDB), Saudi Basic Industries Corp. (SABIC) and pension fund General Organization for Social Insurance (GOSI).
His last job was chief financial officer for a leading car dealership firm after he retired around a year an half ago as head of tax and income department at the finance ministry. The government plans to float 70 percent of the bank’s capital in the fourth quarter of this year. The remainder will be held by GOSI, the Public Investment Fund and the General Pension Organization.