JEDDAH, 26 September 2007 — The Capital Market Authority (CMA) yesterday lifted the remaining restrictions on GCC citizens trading in the stock market, urging Tadawul to treat them and Saudis equally, a CMA statement said.
Citizens of Qatar, Kuwait, Bahrain, Oman and the UAE had been allowed to invest in Saudi stocks except for banks and other financial services.
“GCC citizens will be subject to the rules and conditions that are applied on Saudis in the ownership and exchange of stocks in the market,” the CMA said in a statement carried by the Saudi Press Agency.
Saudi Arabia forbids other foreigners, except those who reside in the Kingdom, from investing directly in the market, though they can invest through funds.
Saudi stocks edged higher yesterday. The Tadawul All-Share Index (TASI) increased by 48.47 points to close at 7,910. Out of 104 companies traded, shares of 59 companies were in positive territory while 25 companies were in the red. Over SR5.32 billion worth of shares changed hands yesterday.
Shares of national Metal Manufacturing and Casting Co. jumped 9.90 percent yesterday to SR83.25. In the insurance sector, shares of Allied Cooperative Insurance Group increased by 8.01 percent to SR111.25 and Saudi Indian Company for Cooperative Insurance by 4.67 percent to SR106.50.
The banking index up 1.63 percent to 20,674.58 points as shares of banks surged yesterday. The only loser was Riyad Bank. Its shares fell 0.40 percent to SR63. Bank Albilad shares were higher by 3.97 percent to SR32.75 and Al-Rajhi Bank by 2.40 percent to SR85.25, SABB by 2.23 percent to SR103.25, Arab National Bank by 2.18 percent to SR82 and Saudi Hollandi Bank by 2.07 percent to SR49.25.
According to the SABB’s Q4-2007 report, which was released last week, corporate earnings for all listed companies in Q2-2007 were healthier than they were in Q1-2007, with only the industrial sector witnessing a slight decline (4 percent) over the previous quarter. Year-on-year earnings were, however, slightly down (by 0.6 percent), but compared to Q1-2007 were up by 12.5 percent.
The report said the banking sector which was acutely affected by the stock market collapse in Q1-2007 appears to be on a recovery path. The 2nd quarter earnings compared to those of previous quarter were up by 2.9 percent, although if compared, year-on-year bank earnings were down 17.2 percent.
In the next two quarters SABB expects banks’ earnings will see further growth. The well-established banks are not as yet feeling much competition from the newly licensed banks and other new financial institutions. However, over time the financial services sector will evolve as competition increases. However, the SABB report said, the Saudi banking sector is set to change in the coming decade as indigenous banks embark on cross-border, mainly regional, acquisitions. Nevertheless, due to the lack of local human resources in the local banking sector, they may well opt simply for minority stakes, only seeking majority positions over time.