JEDDAH, 18 July 2006 — The Saudi stock market rebounded yesterday after falling nearly 13 percent in previous two days. The Tadawul All-Share Index (TASI) jumped 904.23 points or 8.66 percent to close at 11,347.49. All the 81 stocks that were traded yesterday were in the black.
Over SR18 billion worth of shares changed hands yesterday.
Saudi Basic Industries Corp. (SABIC) was most active by value yesterday at SR1.3 billion, followed by Saudi Industrial at SR1.27 billion and Saudi Hotels & Resort Areas Co. at SR1.5 billion.
All indexes were higher. The major Banking and Industrial indexes recorded hefty gains. The Banking Index was 1,965.23 points higher at 31,656.28 and the Industrial Index rose 2,197.94 points to 24,533.42.
In the telecom sector, shares of Saudi Telecom Co. (STC) jumped 9.95 percent to SR107.75 and Etihad Etisalat by 9.70 percent to SR73.50 yesterday.
Shares of cement and agriculture sectors also increased sharply yesterday.
Meanwhile, Dubai-based Institute for International Research (IIR) has announced the launch of Saudi IPO Summit 2006, which will be held in Riyadh Nov. 19-22.
The conference is intended to stabilize the market and help restore investor confidence after a volatile performance in the first half of this year.
The bullish performance of the Saudi stock market in 2005 had been powered in mainly by 6.5 percent economic growth, excess liquidity, a current account surplus of $87 billion, positive corporate results and robust investor confidence. The TASI finished the year up 103 percent and market capitalization registered robust growth of 110 percent, to stand at over $645 billion.
Projections for 2006 were buoyed by the added stimulus from the Saudi government’s privatization program, led by divestures in Saudi Arabian Airlines, Saudi Telecom Company (STC) and Saudi Basic Industries Corp. (SABIC) which pushed the index up a further 17 percent to an all-time high of 20,634 points in late February and market capitalization raced to $800 billion.
However just six companies accounted for almost 55 percent of total market capitalization and overpriced small-cap speculative stocks were leaving the entire bourse vulnerable, some trading at over six times their book value.
These concerns were realized on March 20 when shares dipped below 15,000 points and traders were faced with an another sea of red when trading closed on May 11 as the bourse plummeted to a 14-month low of 10,046 points. That was less than half of the euphoric highs recorded just three months prior and wiped $350 billion off share values.