Blue Chip Firms Exposed to ‘Selling Pressure’

JEDDAH/AMMAN, 4 August 2007 — Saudi shares fluctuated last week after a gradual rebound that lasted for four weeks.

The Tadawul All-Share Index (TASI) shed 1.24 percent, closing at 7,538.94 points, down from 7,633.54 points previous week.

TASI is currently 5.0 percent lower than the year’s start.

The Riyadh-based Bakheet Financial Advisors (BFA) said in its weekly report that Saudi blue chip firms were exposed to “selling pressure for profit-taking” last week, led by the Saudi Basic Industries Corp. (SABIC) and the Saudi Telecom Company (STC), which lost 2.16 percent and 2.58 percent, respectively, despite their good performances.

SABIC shares closed at SR124.75 and STC at SR66.

The BFA noticed that small caps accounted for 20 percent of the market’s turnover whereas they hold only 1.4 percent of the market’s total capitalization.

The BFA report expected the Saudi stocks to show “a steady performance until investors reallocate their portfolios in response to the midyear financial statements” of listed firms.

However, they advised traders to be cautious as “the fluctuations of speculative stocks might negatively affect the investors’ behavior.”

In the insurance sector, shares in Saudi United Cooperative Insurance Co. (Walaa Insurance) jumped by 21.90 percent to SR64, Saudi Fransi Cooperative Insurance Co. (Allianz SF) by 19.43 percent to SR158.25 and Arabian Shield Cooperative Insurance Co. by 16.24 percent to SR68 last week.

Shares in Kingdom Holding Company (KHC), one of the world’s largest and most diversified private investment groups, which started trading for the first time on the Saudi Stock Exchange on Sunday gained 19.51 percent to SR12.25 last week. KHC was also most active by volume at 129,749,563 with over SR1.60 billion worth of shares changed hands.

The agriculture sector suffered badly as shares in Bishah Agriculture dropped 10 percent to SR69.75, Eastern Agriculture by 9.02 percent to SR83.25 and Jouf Agriculture by 5.91 percent to SR43.75.

Riyad Bank shares dropped 3.14 percent, Samba Financial Group 2.10 percent and Al-Rajhi Bank 1.66 percent last week. Saudi Hollandi bank shares gained 2.92 percent and Arab National Bank by 2.27 percent last week.

The stock market turnover also rose slightly last week to SR39.28 billion compared to SR36.84 billion in the previous week.

Arab stock markets are expected to be “quiet” in the coming few weeks, as investors seek fresh moving factors in the wake of the publication of the semi-annual results, financial analysts said yesterday.

“I believe regional markets will be quiet in the coming four or five weeks pending the emergence of new moving factors,” said Raed Hajahjeh from the AB Investment, the investment arm of the Arab Bank.

“A negative mood is dominating markets apparently reflecting lower-than-expected profits of listed firms in the first half of the year,” Hajahjeh told Arab News. “Therefore, we think speculation and short-breath trading will reign during the coming period, with trading focusing on small cap firms and blue chips exposed to sell-offs,” he said.

The Amman Stock Exchange (ASE) continued to come under sell-off pressures last week due to the closure of positions and diminishing liquidity, Hajahjeh said.

The ASE all-share price index dropped 0.24 percent, closing week at 5,669 points from 5,682 points previous week, according to the market’s weekly report.

Kuwaiti shares kept up their strong performance last week, buoyed by impressive midyear results. The KSE all-share price index crashed upward the 12,500-point psychological barrier.

The Kuwaiti benchmark price hit an all-time high of 12,550 points on Tuesday but retreated the next day to close week at 12,501 points, compared with previous week’s close at 12,491 points.

According to the Bayan Investment Company, 110 Kuwaiti firms posted net profits totaling 1.95 billion Kuwaiti dinars (about $7 billion) in the first two quarters of the year. The United Arab Emirates shares suffered last week, reportedly due to the departure of foreign funds and in response to plunges at the world’s major stock markets, analysts said.

The UAE national all-share pride index of the Dubai and Abu Dhabi stock exchanges dropped 2.5 percent last week, closing at 4,376 points from 4,487 points previous week.

The GulfBase GCC Index also declined slightly to 5,395.16 points last week. The value of GCC traded shares, however, rose 6.73 percent to $14.95 billion and volume increased by 20.52 percent to 4.61 billion shares.