JEDDAH/AMMAN, 17 March 2007 — Saudi stocks witnessed gradual selling pressure last week over profit-taking following the noticeable increase in stock prices since the beginning of February.
The Tadawul All-Share Index (TASI) shed 1.93 percent last week, closing at 8,603.10 points, down from 8,772.44 points in the previous week. The index is currently 8.44 percent higher than the year’s start.
The Riyadh-based Bakheet Financial Advisors (BFA) attributed last week’s decline mainly to the retreat of the banking sector, and particularly Al-Rajhi Bank, as well as the Saudi Electricity Co. (SEC). Both firms gained 46 percent and 30 percent respectively in the previous five weeks.
The report warned against the impact of fluctuations in speculative stocks trading on the market during the coming weeks.
“These movements might affect the performance of the Saudi stock market in general, depending on the strength of these fluctuations and their effect on the behavior of blue chip investors, who represent the market’s driving engine,” the BFA said.
The BFA and other analysts expected the Saudi bourse to be affected this week by the decision of the watchdog Capital Market Authority (CMA) to allow new brokerage companies to operate in the market and offering stocks of five insurance firms for public subscription as of today.
The stock market turnover was down slightly last week at SR105.57 billion compared to SR106 billion in the previous week.
Shares of Saudi Arabian Amiantit Co. soared 24 percent last week to SR31 and Al-Babtain Power and Telecommunication Co. rose by 21.13 percent to SR129.
Advanced Polypropylene Co. was the top loser last week as its shares plunged 19.23 percent to SR26.25 and Tabuk Agriculture by 18.44 percent to SR65.25.
Saudi Basic Industries Corp. (SABIC) shares rose slightly to SR126.75 last week.
Saudi Telecom Co. (STC) and Etihad Etisalat’s shares dropped by 2.56 percent and 4.12 percent respectively.
Arab stock markets are expected to move sideways in the coming few weeks pending the release of first quarter results and other moving factors, financial analysts said yesterday. “I believe regional markets will move sideways after they appear to have lost momentum which they gathered since the beginning of the year, mainly against the backdrop of dividend distributions,” an Amman-based portfolio manager said.
“Therefore, I think investors will be focusing attention in the coming three or four weeks on the performance of listed firms during the first quarter of the year,” he added.
Jordanian shares extended losses on Thursday after the heavyweight Arab Bank announced that it was “stopping negotiations” with the United Arab Emirates real estate conglomerate, Emaar, for selling it a 10 percent stake in the bank.
The bank’s board Chairman Abdul Hamid Shoman said the talks with the “strategic partner failed to reach agreement on the price” of the deal.
The board’s Deputy Chairman Sabih Al-Masri announced on Feb. 5 that the bank had in principle approved Emaar as a “strategic partner” and that it was conducting negotiations with the UAE group to sell it a 10-percent interest.
The Arab Bank Group, which operates in more than 30 countries across the globe, posted a 31.6 percent increase in net earnings in 2006, to $372 million, compared with the previous year.
The bank’s board is due to hold a shareholders meeting on March 30 to endorse distribution of 25 percent dividends.
Analysts believed the bank’s decision would have a negative impact on the Amman Stock Exchange (ASE) this week. The ASE all-share price index lost 1.72 percent last week, closing on Thursday at 6,186 points, compared with previous week’s close at 6,294 points.
Kuwait’s KSE all-share price index gained 3 percent last week to cross the 10,000-point psychological barrier for the first time since Jan. 13 and closed week at 10,058 points.
The Kuwaiti benchmark price derived backing from the Kuwait Projects Co.’s sale of its 51 percent stake in Alwataniyah Telecom to a Qatari firm for $3.7 billion, analysts said.
The unified all-share price index of the UAE stock exchanges of Dubai and Abu Dhabi shed 3 percent last week, closing at 4,012 points, down from 4,138 points last week.
Analysts said that the UAE markets witnessed their worse week since the beginning of the year, as investors were involved in a “deep profit-taking move that reflected declining confidence in the market”.
The GulfBase GCC Index was down 1.07 percent last week at 5,187.43.