JEDDAH, 25 January 2007 — The Saudi stock market failed to gain positive momentum from the announcements of financial results of listed companies. The Tadawul All-Share Index (TASI) plunged below the 7,000 points mark for the first time in more than two years. The index tumbled 168.56 points or 2.36 percent yesterday to close at 6,987.86 points, its lowest close since Oct. 21, 2004. The index is already down 11.92 percent or 945.43 points so far this year after closing at 7,933.29 on Dec. 31, 2006.

The stock market turnover was SR7.70 billion yesterday. Due to falling stock prices, the Saudi Capital Market Authority (CMA) Chairman Abdul Rahman Tuwaijeri, said last week that the authority would apply new laws to stabilize the market. Recently the CMA suspended trading in Bishah Agriculture Development Co. and Anaam International Holding Group for incurring heavy losses.

Despite a record profit of SR20.3 billion for 2006, Saudi Basic Industries Corp. (SABIC) shares failed to get a boost as they were trading at SR98.50.

In the banking sector, only SABB managed to stay in the positive territory while shares of all other banks declined yesterday. SABB announced on Tuesday a net profit of SR3.04 billion for 2006.

Shares of Saudi Telecom Co. (STC), the largest Arab telecom company by market value, dropped yesterday as it announced second consecutive decline in quarterly profit. STC shares fell 4.32 percent to close at SR72 yesterday.

Etihad Etisalat shares also dropped yesterday despite it posted fourth-quarter net profit of SR330 million compared to a net loss of SR167 million in the year-earlier period. Its shares plunged 6.90 percent to SR40.50 yesterday.

The new company law, which has been presented to Custodian of the Two Holy Mosques King Abdullah for approval, is expected to boost the Saudi bourse as it proposed to cut the nominal value of shares from SR10 to one riyal.

Commerce and Industry Minister Hashim Yamani said the new law would replace the existing one, which was issued in 1965.

“The main objective of the law is to regulate establishment of companies and their activities,” the minister said in a statement carried by the Saudi Press Agency. He said the new law has specified that the minimum age of a company partner should not be more than 18 years. The ministry has also made alterations into articles related to joint stock companies, matching with CMA regulations.

Financial analysts said the plan to cut nominal value of shares would encourage more people to purchase shares during initial public offerings (IPOs) of joint stock companies and shrink the venue for speculators.

According to the new law, joint stock companies intending to sell part of their shares in IPOs should have a capital of at least SR200 million and should offer at least 50 percent of their shares, an official source at the Commerce and Industry Ministry said. The law has also reduced the rate of capital depreciation from 75 to 50 percent before a company being declared bankrupt.

Analysts said the new measure was aimed at tackling the situation of loss-making companies and protect the interests of shareholders.