‘Speculation to Dominate Middle East Markets’

JEDDAH/AMMAN, 11 August 2007 — Saudi shares resumed their upward trend last week, apparently buoyed by the strong performance of blue chips in the first six months of the year.

The Tadawul All-Share Index (TASI) climbed 2.34 percent, closing at 7,715.62 points up from 7,538.94 points in the previous week.

Still TASI is 2.7 percent lower than the year’s start.

The Riyadh-based Bakheet Financial Advisors (BFA) report attributed the rise mainly to the midyear results of the telecom sector and the “growth potential of telecom companies, especially plans by the Saudi Telecom Company (STC) to expand its operations to new markets outside the country.”

STC shares gained 4.55 percent last week to close at SR69 and Etihad Etisalat by 4.82 percent to SR65.25. However, on YTD basis STC shares declined 16.87 percent but Etihad Etisalat shares jumped 25.48 percent.

“TASI also gained from the positive performance of the banking stocks,” the BFA said.

Shares in Saudi Hollandi Bank increased by 9.09 percent last week, Al-Rajhi Bank by 7.41 percent, Bank AlJazira by 5.64 percent and Riyad Bank by 5.56 percent.

Judging by profits recorded in the first two quarters of the year, Saudi banks showed “ability to improve operational activities and assimilate the losses caused by the shrinking trading commission,” the BFA report added.

The BFA noticed that the doubling of the daily trading volume at the Saudi stock exchange over the past five weeks “reflected a positive sign for investors’ confidence in the Saudi market.” The stock market was also dominated by the insurance sector last week. Shares in Malath Cooperative Insurance and Reinsurance Co. (Malath Insurance) jumped 32.65 percent to SR65, followed by The Mediterranean & Gulf Insurance & Reinsurance Co. (MedGulf) as its shares gained 28.46 percent to SR41.75. Shares in other two insurance companies, Saudi IAIC Cooperative Insurance Co. (Salama) and Sanad Insurance & Reinsurance Cooperative Co., increased by 15.25 percent to SR119 and 13.92 percent to SR67.50, respectively.

The insurance companies were also most active by value last week as over SR2 billion worth of Salama shares changed hands, followed by MedGulf SR1.89 billion, Arabian Shield Cooperative Insurance Co. SR1.74 billion and Saudi United Cooperative Insurance Co. (Walaa Insurance) SR1.54 billion.

In the cement sector, Yanbu Cement was the top loser last week as its shares dropped 2.17 percent to SR78.75.

The stock market turnover was almost unchanged at SR39.22 billion last week.

Jordanian shares were also steady last week as demand continued to build up for speculative small cap stocks.

Arab stock markets seemed this week to derive momentum from semi-annual results of listed firms, but financial analysts said yesterday they expected regional shares to move sideways pending the emergence of fresh incentives.

“Despite last week’s rebound by Saudi, Jordanian and UAE stocks, we believe regional bourses will be volatile during the coming weeks as investors monitor the emergency of fresh moving factors,” an Amman-based portfolio manager said.

“We think that speculation would continue to dominate Middle East markets in the coming weeks in the absence of clues as to where stocks were heading,” he added.

The all-share price index of the Amman Stock Exchange gained 0.52 percent last week, closing at 5,698 points compared with previous week’s close at 5,669 points, according to the ASE weekly report.

Kuwait’s KSE all-share price index retreated marginally last week to close at 12,478 points from 12,501 points previous week in what analysts described as a profit-taking move.

The decline followed a rebound that lasted for several weeks which was a reflection of good performance of Kuwaiti firms.

According to the weekly report of the Bayan Company, 142 Kuwaiti firms so far announced midyear profits amounting to 2.52 billion Kuwaiti dinars (about $9 billion).

The all-share price index of the UAE stock exchanges of Dubai and Abu Dhabi gained 0.9 percent last week, closing at 4,415 points compared with previous week’s close at 4,376 points.

The UAE benchmark price is currently 9.53 percent higher than the year’s start.

The GulfBase GCC Index also surged 1.36 percent to 5,468.76 points last week. The value of GCC traded shares, however, declined 2.14 percent to $14.63 billion but volume of traded shares increased by 1.54 percent to 4.68 billion shares.