JEDDAH, 15 April 2007 — Disappointing first quarter results of listed companies and the approval for initial public offering (IPO) of Saudi Kayan Petrochemical Co. later this month sent the Saudi stock market tumbling 5.65 percent yesterday. The Tadawul All-Share Index (TASI) fell 440.07 points to 7,349.69 after gaining slightly last week. The index is 7.36 percent lower so far this year than at the end of last year when it closed at 7,933.29 points.
Out of 86 stocks traded, the only gainer yesterday was Saudi Hollandi Bank as its shares rose 0.95 percent to SR53.25, while shares of all other companies were in negative territory. Over SR11.71 billion worth of shares changed hands compared to SR80.84 billion last week. The industrial and banking sectors took a beating as the indices closed 1,388.40 points and 659.95 points lower respectively.
Samba Financial Group General Manager and Chief Economist Brad Bourland told Arab News: “The earnings being reported for the first quarter of this year are being compared with the first quarter of last year, which was the best quarter because it was at the peak of the stock market. So earnings look weak by comparison, especially for banks.”
Analyst Abdul Hameed Al-Omari said the Saudi bourse was going through a crisis. He said millions of Saudi investors in the market were suffering from losses of billions of riyals. He said the Saudi stock market had lost SR2 trillion as a result of the continuous decline of the index last year and this year.
According to him, the delay in regulating the market, the large influx of funds to a market with few numbers of listed companies, large-scale loan facilities provided by local banks were some of the reasons for the current stock market debacle.