JEDDAH/AMMAN, 22 July 2006 — The Saudi stock market continued its sharp decline last week with the current political tensions in the region leaving a negative impact on investors’ sentiments.

The Tadawul All-Share Index (TASI) plummeted 11.66 percent to close the week at 10,485.06 points from 11,868.42 points the previous week. The TASI is currently 37.3 percent lower than the year’s start.

The stock market turnover also declined to SR84.95 billion last week compared to SR109.69 billion in the previous week.

Saudi Industrial Development Co. was most active by value traded last week at SR4.52 billion, followed by Saudi Livestock at SR4.50 billion, Saudi Basic Industries Corp. (SABIC) at SR4.12 billion and Saudi Electricity Co. (SEC) at SR3.09 billion.

In the major banking sector, except Samba Financial Group, shares of all other banks edged lower last week. SABIC shares suffered 15.06 percent drop last week to SR134.

Out of 81 stocks traded, shares of only two companies — Samba and Tihama — increased last week. The Riyadh-based Bakheet Financial Advisors (BFA) attributed the decline partly to the “decelerating growth” in half-yearly profits of listed firms.

“It is worth mentioning that the 20 largest-cap companies reported a 9 percent growth in their accumulative profits in the second quarter over the first quarter of 2006, while their half-yearly profits grew 28 percent over the respective period of last year, the BFA said in its weekly report.

“The BFA projects a 30 percent growth in the total profits of listed firms in 2006 over 2005, while the actual profit growth was 44 percent in 2005,” it added.

The consultancy house expected investors “to re-evaluate their portfolios and consolidate their positions” after all semi-annual results of listed companied had been published.

Saudi analyst Abdullah Al-Harbi said “the sharp decline in the prices of Saudi shares is unjustifiable” given the huge oil income which is due to accrue to the world’s largest crude exporter this year.

“I think the market is becoming entirely under the control of groups of speculators,” he added.

Arab stock markets are expected to suffer further from the dragging war, financial analysts said yesterday.

However, they warned that “coalitions of speculators” were exploiting the military operations in the region to push down prices with a view to buying shares at cheap prices and consequently collecting huge profits.

“I believe coalitions of speculators are teaming up to put downward pressure on prices and force sell-offs on the part of scared small investors as happened several times in the past three months,” an Amman-based portfolio manager told Arab News.

“Military operations can justify price plunges in Lebanon and Israel, but cannot justify faltering markets in a country like Saudi Arabia, where economic fundamentals tell another story,” he said. Jordanian shares fluctuated within a limited range this week amid reports that Jordan stood to gain from the turmoil in Lebanon prevented stock prices from going further down.

Local reports said that the hotel occupancy rate in the country was approaching 100 percent as a result of the arrival of tens of thousands of Arab tourists who fled Israeli air strikes on Lebanon.

The Israeli attack on Lebanon “has the potential of re-directing investments to Jordan, which seems to reap the benefit of any political turmoil in the region, especially if the conflict were to spread to neighboring Syria”, said the weekly report of the Atlas Investment Group, the Arab Bank’s investment arm.

The all-share price index of the Amman Stock Exchange shed 2.72 percent, closing week on Thursday at 5,789 points down from 5,951 points in previous week, according to the ASE weekly report.

Kuwait’s KSE all-share price index fell 2.7 percent last week, to close at 9,666 points compared with previous week’s close at 9,930 points. The benchmark prices of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi shed 2.1 percent and 1.2 percent to close respectively at 419.5 points and 3,493 points.

Qatar’s all-share index declined 4.2 percent last week, closing at 7,860 points. Egypt’s Hermes all-share price index lost 3.8 percent last week, closing on Thursday at 44,141 points from 45,868 points in the previous week.