JEDDAH, 9 March 2007 — The Saudi stock market rallied by an impressive 16 percent in February, sending its year-to-date performance into positive territory after the huge losses in January.

“This has been the most significant development in the Middle East stock market situation in February with the turnaround in the Saudi market,” a monthly Middle East stock market report released yesterday by Rasmala, a regional investment bank headquartered at the Dubai International Financial Center, with operating subsidiaries in Riyadh and London.

It was close to this time last year that the Saudi Tadawul Index closed at 20,635, before starting its huge sell-off to below 7,000 during January of this year. “February’s rally, despite some profit-taking in the last few days of the month, confirmed our view that the market had set a bottom earlier this year and the much anticipated turning point in investor sentiment has been realized.

Importantly, the February rally was led by large cap blue chips banks such as Samba and Rajhi which rallied by 25 percent and 32 percent, respectively.

The market heavyweight Saudi Arabian Basic Industries Corporation (SABIC) rallied by 13 percent,” the report prepared by Khaled Al-Masri, executive partner, said.

The IPO schedule is filing up as five insurance firms have been given the go ahead to offer shares to the public in March and this will be a good test for the market to confirm that investor confidence has completed its recovery.

“Given the fact that the MedGulf IPO was well received by the market, it would be safe to assume that the other insurance companies IPO’s will be successful and this important sector will add depth to the overall market,” he said.

Nine consortia may bid for the third mobile phone license in Saudi with the requirement that the eventual winner will be listing 40 percent of their shares on the Saudi Stock Exchange, he said, mentioning some of the major developments in the corporate world.

Al-Marai Company, the largest producer of dairy products in the GCC, will increase its capital by issuing new shares to acquire Western Bakeries and International Bakery Services Company and enter this new market.

The Dubai market ended the month with modest gains to close slightly higher. This is the third consecutive positive month for the index after losing more than 45 percent of its value in 2006.

The small gains in January and February have succeeded in stabilizing the market amid generally positive profit results which have gone a long way to calm fears of an overall decrease in corporate profitability after the market losses in 2006.

In a relatively rare development, the Abu Dhabi market has stolen the headlines from the Dubai market as solid gains of 3.70 percent over the month take its year-to-date performance into positive territory. The property sector was especially strong.

It reacted to news that the country’s third largest developer, Al-Dar, will be allowing non-UAE nationals as shareholders as the UAE continues liberalizing the property sector to allow more foreign investment and participation.

Kuwaiti stock markets ended February with small gains, with the KSE index posting a 0.42 percent increase from the January losses.

The Omani market ended the month only slightly higher to register the third consecutive month of positive movement. It is the only GCC market to end the year 2006 with gains.

The Qatari market lost two percent in February taking its 2007 losses to 12 percent to add to the large losses in 2006.

The Egyptian market also did very well after having hit by heavy profit-taking in January and ended the month sharply higher.