Saudi Stocks Rebound on Attractive ‘Buy Levels’

JEDDAH/AMMAN, 25 November 2006 — The Saudi stock exchange, which was the scene of a series of plunges since the last week of October, was the only Arab bourse that recorded a rebound last week.

The Tadawul All-Share Index (TASI) gained 3.6 percent last week, closing at 8,701.53 points, up from last week’s close at 8,400.88 points. The index gained 300.65 points or 3.58 percent in a week. The TASI is currently 47.9 percent lower than the year’s start.

“This week’s rebound was driven by attractive valuation/buy levels for many blue chip stocks, which attracted investors’ attention and convinced them to purchase stocks at low prices,” the Riyadh-based Bakheet Financial Advisors (BFA) said in their weekly report.

BFA also reported a declining interest in speculative stocks, with investors “becoming convinced that no more profits could be generated from trading in companies the finances of which are in the red”.

“We expect the market to stabilize in the coming period until the end of the year, with investors keeping an eye on the annual results of blue-chip firms,” the BFA said.

“However, it remains difficult to predict the future trend of the small cap stocks because they are always driven by speculation,” they added.

The stock market turnover also increased slightly to SR58 billion compared to SR56.90 billion in the previous week.

The top gainers last week were Qassim Cement as its shares jumped 27.36 percent to SR175.75, followed by Saudi Industrial, up 15.32 percent to SR32, shares of Etihad Etisalat rose 14.63 percent to SR58.75, SABB shares soared 14.35 percent to SR131.50 and Samba Financial Group, up 12.50 percent to SR153. Al-Baha Investment & Development was most active by value last week as over SR2.30 billion worth of shares changed hands. However, its shares plunged 30.62 percent to SR64 last week. Bishah Agriculture’s shares dropped 22.68 percent to SR108.25.

The Emaar Economic City was most active by volume at 55,139,613 but its shares edged lower by 4.44 percent to SR21.50 last week.

A bearish sentiment continued to dominate Arab stock markets last week for the fourth week in a row, and financial analysts said yesterday they expected the downward trend to remain in force until the end of the year due to “lack of confidence” on the part of investors.

“I believe the downward trend will continue to prevail for the coming few weeks due to a variety of reasons, mainly a lack of confidence on the part of investors,” said Raed Hajahjeh, an analyst at the Amman-based Atlas Investment Group, the Arab Bank’s investment arm. “What is going on cannot be justified on fundamental grounds. We think a liquidation of positions continues unabated,” Hajahjeh told Arab News.

“We believe markets will remain targets for a deep correction move in the short and medium terms, but in the long run we can expect rebounds, given the fact that low prices provide buy opportunities,” he said.

Hajahjeh detected a “strong sell-off” that continues to put downward pressure on Jordanian shares over the past month.

The all-share price index of the Amman Stock Exchange shed further 2.73 percent last week, closing at 5,631 points down from 5,789 points in the previous week, according to the ASE weekly report.

“Technically speaking, we are moving towards the 5,200-point support,” Hajahjeh said. “There has been a liquidation of positions by foreign funds and local investors,” he added.

Kuwait’s KSE all-share price index plummeted 4.6 percent last week, to close at 9,830 points down from 10,281 points last week.

The decline was the hardest since mid-July, as the crashing of the 10,000-point psychological barrier prompted a sell-off across-the-board and the market turned out to be highly volatile, an Amman-based portfolio manager said.

The benchmark price of the Dubai stock exchange in the United Arab Emirates also plunged 5.5 percent last week, closing at 358.64 points from 379.60 points last week.