JEDDAH/AMMAN, 9 June 2007 — The Saudi stock market remained under downward pressure due to profit-taking for the second week in a row.
The Tadawul All-Share Index (TASI) lost 1.73 percent, closing the week at 7,362.96 points, the lowest level this year. The Saudi benchmark price closed last week at 7,492.66 points. The TASI is currently 7.2 percent lower that the year’s start.
The Riyadh-based Bakheet Financial Advisors (BFA) said in its weekly report that the retreat was led by blue chips, mainly the Saudi Basic Industries Corp. (SABIC) and the Saudi Electricity Company (SEC), which were down by 3.84 percent to SR119 and 2.13 percent to SR11.50 respectively.
Speculative small caps were also subject to deep downward correction last week, the BFA report said. The report expected small caps to extend losses further as their prices were still “too high” compared with their fundamentals.
The stock market turnover was also small at SR27.54 billion compared to average of previous weeks.
The top gainer last week was Saudi Ceramic Co. as its shares soared 12.24 percent to SR82.50, followed by Nama Chemicals by 7.14 percent to SR22.50 and The Saudi Investment Bank by 4.55 percent to SR40.25. Shares of National Agriculture Marketing Co. plunged 37.99 percent to SR67.75 last week.
Shares of the newly listed Saudi Vitrified Clay Pipes Co. declined 13.29 percent to SR140.25.
In the telecom sector, shares of Saudi Telecom Co. and Etihad Etisalat dropped 0.40 percent to SR62.75 and 4.74 percent to SR50.25 respectively.
The market, however, is expected to receive a shot in the arm with the start of Jabal Omar Development Company’s initial public offering (IPO) today. The company offers 201 million shares to Saudis at the rate of SR10 per share without charging any commission. Jabal Omar has a capital of SR6.7 billion with a total of 671.4 million shares.
A person can subscribe to a minimum of 50 and a maximum of 10 million shares during the 10-day offering. Jabal Omar shares will be exchanged on the Saudi bourse after the completion of share allocation and issuance of a ministerial decision on the company’s establishment.
Analysts expected big demand for Jabal Omar shares as the company was formed to carry out a massive real estate project close to the Grand Mosque in Makkah. Khaled Al-Jumaie, a financial analyst, said he expected each subscriber would buy large numbers of shares, adding that all the shares would be sold off within the first days of the IPO.
Arab stock markets also struggled to keep up their upward trend last week, but lack of liquidity and profit taking moves put downward pressure on prices, mainly in the Saudi and Jordanian bourses, official analysts said yesterday.
They expected regional shares to remain lackluster in the coming four weeks in the run-up for the publication of semi-annual results.
“I believe Arab stocks will remain for the coming three weeks under pressure of lack of liquidity and predictions of investors regarding the performance of listed firms in the first half of the year,” said Raed Hajahjeh, deputy chief of trading at the AB Invest, the Arab Bank’s investment arm.
“Investors also tend to move from market to market in the region in response to profit opportunities,” he told Arab News.
Other portfolio managers believed that oil prices, surplus petrodollars and political developments would also represent “moving factors” in the medium and long terms.
The Amman Stock Exchange (ASE) also failed to take off last week as margin traders were forced to close down their positions ahead of the weekend.
The ASE all-share price index lost further 0.87 percent last week, closing at 5,780 points, down from 5,831 points previous week.
“I believe liquidity restrictions will remain the key player in the market for weeks to come,” Hajahjeh said.
Kuwait’s KSE all-share price index closed week almost flat at 11,491 points compared with previous week’s close at 11,489 points.
The unified all-share price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi closed week marginally higher at 4,594 points, up from 4,576 points last week. The GulfBase GCC Index also dropped slightly last week to 5,253.82 points. The value of GCC traded shares fell 39.26 percent to $13.35 billion and volume declined 35.94 percent to 5.33 billion shares last week.