JEDDAH, 29 August 2007 — The Council of Ministers’ decision on Monday to authorize the Capital Market Authority (CMA) to remove restrictions on investors from the five other Gulf Cooperation Council (GCC) countries gave a boost to the Kingdom’s stock market yesterday. The Tadawul All-Share Index (TASI) edged higher by 46.99 points to 8,162.82 after banking and insurance stocks made hefty gains yesterday. The banking index increased 1.85 percent or 378.65 points to 20,897.43 as shares in all listed banks surged.
According to the Al-Rajhi Bank’s monthly newsletter for July, the Kingdom’s banks expect to benefit from public and private spending in major infrastructure and housing projects on the back of the current economic boom.
Although the profits of the Saudi-listed banks were lower in the second quarter of 2007 compared to the same period last year, the potential in the Saudi market is strong enough to help the banks post a reasonable growth in net profits at the end of 2007.
Saudi Hollandi Bank shares jumped 6.53 percent to SR53 after the bank announced on Monday in Riyadh that that the CMA has given license to its affiliate, the Saudi Hollandi Capital Company, to begin operations in the capital market’s securities sector.
Shares in all other banks also increased. The Saudi Investment Bank’s shares were higher by 2.55 percent, while the shares at Banque Saudi Fransi increased by 2.54 percent and Bank Albilad by 2.22 percent. Shares in Bank AlJazira jumped by 3.45 percent to SR60 yesterday.
The insurance index jumped 3.24 percent to 2,667.70 points as shares of all companies increased yesterday.
Shares in the Saudi Indian Company for Cooperative Insurance, which started trading on the Saudi stock market on Saturday, soared 10 percent to SR145.75 and Allied Cooperative Insurance Group, which made Tadawul debut on Monday, increased 9.79 percent to SR120.50 yesterday.
Alahli Takaful Company shares were higher by 8.92 percent to SR232 while shares in all other insurance companies also increased yesterday.
The telecom sector was in the red as shares in Saudi Telecom Co. (STC) and Etihad Etisalat fell by 0.35 percent to SR72 and 0.70 percent to SR70.50, respectively.
Over SR12 billion worth of shares changed hands yesterday. Saad Al-Mansour, a financial analyst in stock market, said the increase in the liquidity in the current market trading reflected the extent of “spin” on shares of some companies, which experienced good increases.
Mansour said there was currently a focus on the shares of speculating companies which were showing earlier some sort of sluggishness as a result of the liquidity of the insurance sector. The trend led to reducing the focus on the insurance sector and helped double the interest in the speculative stocks.
The trend of the stocks of some companies is rising to the maximum one-day limit and on the next day falling. This indicates the effort from some share manipulators who want to resort to methods to divert the attention of the monitoring authorities with the aim of resuming their artificial rise without the intervention of the regulatory authorities.
Mansour said the market was likely to climb in the coming weeks. He denied the rumors that the market would be sluggish during the third quarter and during Ramadan.