JEDDAH/AMMAN, 14 April 2007 — The Saudi stock market performed strongly at the start of last week in the wake of a prolonged drop that lasted three weeks, but retreated most of the week apparently under the pressure of shrinking profits of leading banks in the first quarter of the year.

The Tadawul All-Share Index (TASI) crashed the psychological level of 8,000 points upward on Saturday but closed week at 7,789.76 points — about 1.61 percent lower than previous week’s close at 7,666.62 points. TASI is currently 1.8 percent lower than what it was at the year’s start.

“TASI was negatively affected by the blue chip decline, particularly the banking sector,” the benchmark price of which lost 2.7 percent following reports that the first quarter profits of leading banks receded from their levels in the first quarter of 2006, the Riyadh-based Bakheet Financial Advisors (BFA) said in their weekly report.

The BFA attributed the shrinking profits of banks in the first quarter of the year to the diminishing income accruing from stock trading commissions.

SABB shares plunged 6.07 percent, Saudi Hollandi Bank by 5.80 percent, Riyad Bank by 4.91 percent and Banque Saudi Fransi by 4.35 percent last week. Meanwhile, the shares of Bank AlJazira and Bank Albilad rose 3.41 percent and 2.13 percent respectively.

The BFA also noticed that last week saw a strong demand for small-cap stocks regardless of their results. “It is important to realize that the continuous rise in prices of speculative stocks may fuel the threat of an imminent market collapse as it happened before,” the BFA said.

The weekly report expects investors to monitor the first quarter results of blue chips “to decide how to engage in the market” for the coming period.

In the industrial sector, shares of Saudi Basic Industries Corp. (SABIC) edged higher 4.76 percent to SR121.

The National Agriculture Market Co. (Thim’ar) was the top gainer last week at its shares jumped 45 percent to SR79.75, while Hail Agriculture was the top loser as its shares dropped 17.78 percent to SR46.25.

However, the stock market turnover rose to SR80.84 billion last week compared to SR65 billion in the previous week. Arab stock markets are expected to move sideways in the coming couple of weeks as investors monitor first quarter corporate results, financial analysts said yesterday.

However, they noticed that regional bourses could be “losing momentum” due to shrinking confidence in this type of investment, as speculation reigns and fundamentals return to the back seat.

“I believe Arab markets will remain volatile for the coming couple of weeks as investors monitor first quarter profits, amid indications that the performance of businesses in the first three months of the year could fall short of their levels in the same period of 2006,” an Amman-based portfolio manager said.

Jordanian stocks remained stable during the week, as market watchers were on the lookout for the first quarter results, said AB Invest, the Arab Bank’s investment arm.

The all-share price index of the Amman Stock Exchange inched up 0.41 percent, closing week at 6,071 points compared with the previous week’s close at 6,046 points, according to the ASE weekly report. Kuwait’s KSE all-share price index gained 1.1 percent last week, closing at 10,352 points, up from 10,243 points last week.

The benchmark price of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi gained 2.2 percent, closing at 3,945 points, up from 3,860 points the previous week.

The GulfBase GCC index rose 1.58 percent last week to 4,963.37 points. The value of GCC traded shares gained 3.91 percent to $26.29 billion and the volume jumped 23.40 percent to 4.98 billion shares.