JEDDAH/AMMAN, 17 June 2006 — The Saudi stock exchange continued its volatile performance last week amid a persistent wave of speculation.
The Tadawul All-Share Index (TASI) gained 161.87 points or 1.35 percent, closing at 12,046.10 points on Wednesday, up from 11,994.10 points in the previous week after the five-day trading was introduced from Thursday. The Capital Market Authority (CMA) announced earlier that starting June 15 the trading week would be reduced from six to five days, or Saturday to Wednesday.
TASI is currently 27.9 percent lower than the year’s start.
“It seems that investors have started to re-evaluate their positions ahead of the second quarter results of listed firms”, according to the Riyadh-based Bakheet Financial Advisors (BFA).
The BFA report expected shares of speculative firms to go down in July in response to what is widely expected as “weak financial ratios.”
The National Commercial Bank (NCB) said in its latest market review that the Saudi economy is still in the boom cycle, listed companies are making more investments on their strong ability to fund capital increases. However, the near-term outlook remains quite bearish until the second quarter results demonstrate a solid change in the direction of profitability growth. The TASI is expected to oscillate with between 11,000 points and 13,000 points in the summer season. The stock market turnover, however, dropped to SR138.64 billion compared to SR150 billion in the previous week.
Saudi Paper Manufacturing Co. (SPM) was top gainer last week as its shares soared 130.24 percent on debut on Wednesday. SPM shares closed at SR142.75.
Saudi Electricity Co. (SEC) was most active by volume and value last week at 348,920,295 and SR8.14 billion, respectively.
The CMA also announced that it has added shares of Saudi Research & Marketing Group (SRMG), the first Arab media company to go public, to the Tadawul index from Wednesday. SRMG shares jumped 106.52 percent on debut on the Kingdom’s stock market on May 15.
Meanwhile, Arab bourses are expected to remain subdued in the coming couple of weeks as investors monitor the semi-annual results of listed firms, analysts said yesterday.
They complained that lack of incentives and the recurrent, “politically-motivated” intervention by governments could hinder advent of the consolidation phase that paves the ground for a firm rebound.
“I believe markets lack steadiness because investors adopt a speculative pattern of action,” Wajdi Makhamreh, head of brokerage at the Jordan Finance & Investment Bank, told Arab News.
“Apparently to avert the repetition of recent plunges, traders prefer a hit-and-run strategy, whereby they stick to short-term transactions with low profits,” he said.
The Kuwait-based Al-Shall Consultancy Bureau criticized the official intervention by respective governments in regional stock markets as having “adverse consequences” on the performance of markets.
Al-Shall expressed the belief that the recent corrections witnessed by most regional markets would have “positive effects”, and expected the huge surplus oil income would give a push to regional bourses.
Jordanian stocks plummeted last week due to lack of liquidity after the Stock Exchange Commission adopted new rules that forced brokerage firms to settle accounts of clients on weekly basis, portfolio managers said.
However, the market seemed to rebound on Thursday after Prime Minister Marouf Bakhit pledged to address all negative factors arising from the new rules.
The all-share price index of the Amman Stock Exchange shed 4.43 percent last week, closing on Thursday at 6,366 points, compared with previous week’s close at 6,662 points, according to the ASE weekly report.
Kuwait’s KSE all-share price index fell 1.0 percent last week, closing at 10,243 points down from 10,340 points in the previous week.
The all-share price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi edged lower last week, closing on Thursday at 4,565 points compared with previous week’s close at 4,589 points.