JEDDAH/AMMAN, 7 July 2007 — Saudi shares dived to record lows at the beginning of last week, but recovered later, reflecting a cautious approach ahead of the publication of semi-annual results of the listed companies.
The Tadawul All-Share Index (TASI) hit its lowest point since February 2005, but recovered later to close at 7,168.70 points that represents a 2.25 percent increase over previous week’s close at 7,011.16 points. The index jumped 179.53 points or 2.57 percent on Wednesday.
TASI is currently 9.6 percent lower than the year’s start.
The fluctuation “reflects how investors are cautious while they await the midyear corporate financial results for listed companies”, the Riyadh-based Bakheet Financial Advisors (BFA) said in its weekly report.
“In addition, more investors are keeping away from the market” due to concerns that the results of the first six months could be disappointing, it added.
The BFA expected trades to be “vigilant” awaiting the results of blue chip firms, which will decide the direction of the market in the next weeks. Food Products Co. was the top gainer last week as its shares rose 10.69 percent to SR36.25. Shares of Saudi Real Estate Co. edged higher 8.80 percent to SR34 last week. Shares of the newly-listed Arabian Shield Cooperative Insurance Co. dropped 19.70 percent to SR53 and SABB Takaful by 5.76 percent to SR131 last week.
Shares of Malath Cooperative Insurance and Reinsurance Co. fell 2.50 percent, the Mediterranean & Gulf Insurance & Reinsurance by 2.04 percent and Saudi IAIC Cooperative Insurance Co. (Salama) by 2.49 percent.
The only gainer in the insurance sector was the National Company for Cooperative Insurance (NCCI) as its shares edged higher by 4.52 percent to SR104 last week.
Saudi Basic Industries Corp. (SABIC) shares made hefty gain of 4.93 percent to SR117 last week.
The five-day initial public offering of the Saudi Printing & Packaging Company (SPPC), a subsidiary of media giant Saudi Research & Marketing Group (SRMG), which ended on Wednesday, attracted more than SR420 million in investment from over a million subscribers and registering an oversubscription of 354 percent. The stock market turnover, however, decreased to SR23.55 billion last week compared to SR36.82 billion in the previous week.
Mutual funds of Saudi banks play a big role in the Kingdom’s stock market, ensuring good earnings to investors. Samba Financial Group said yesterday that earnings from its real estate fund reached 19.44 percent during the last four months. The fund was set up in February 2007.
“This result is a record considering the fund’s short period,” said Eissa Al-Eissa, the CEO of the bank. “Samba was the first bank to introduce a real estate fund in light of the golden opportunities provided by the sector,” he said, adding that it is run by professionals with the cooperation of Omar Qassim Al-Esayi Group.
The fund has launched a number of real estate projects in Makkah and Jeddah in association with Al-Esayi Group, covering a total area of four million square meters. The bank also operates two other funds to invest in Chinese projects and Gulf stocks. Returns from the funds reached 34.1 percent.
Cautious optimism is also expected to dominate Arab stock markets in the coming week as investors monitor the midyear results particularly of blue chip firms, analysts said yesterday.
“I believe a mood of cautious optimism will be ruling at regional markets next week with traders’ attention focused on the performance of listed firms, particularly leading companies, during the first half of the year,” Nizar Taher, deputy chief of brokerage at the Jordan Ahli Bank, told Arab News.
“In addition to the midyear results, the volume of liquidity will be the second moving factor at Arab bourses,” he said.
Taher pointed out that the Gulf bourses enjoyed a high degree of liquidity due to the huge surplus petrodollars accumulated by Saudi Arabia, Kuwait and the rest of Gulf Cooperation Council (GCC) member countries.
“But apparently the level of activity at Gulf bourses is decided by the degree of confidence investors attach to trading in stocks,” he said.
The GulfBase GCC Index also rose 2.34 percent last week to 5,307.57 points last week. The value of GCC traded shares, however, declined 17.63 percent to $12.62 billion but volume rose 1.13 percent to 4.93 billion shares last week.
Jordanian shares were steady last week, despite a 0.47 percent loss in the all-share price index of the Amman Stock Exchange on Thursday due to the forcible closing of positions at the end of the weak, Taher said.
The ASE benchmark price closed week marginally higher at 5,775 points from 5,762 points previous week, according to the market’s weekly report.
“Speculation is currently the market’s key moving factor pending the half-year results, particularly of leading companies,” Taher said.
Kuwait’s KSE all-share price index jumped to a new record high of 12,207 points last week, winning 1.15 percent from previous week when the benchmark price closed at 12,068 points.
The Global Investment House attributed the vigorous performance of Kuwaiti shares to the expectations of good midyear results of Kuwaiti blue chip firms.
The unified all-share price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi gained 1.8 percent last week, closing at 4,600 points up from previous week’s close at 4,520 points.
Egypt’s Case 30 index, measuring the performance of the most active 30 firms, hit an all-time high of 8,167.7 points last week, buoyed by the performance of heavyweight firms, analysts said.