JEDDAH/AMMAN, 29 September 2007 — Saudi shares kept up their gradual rebound last week, but thin trading reigned reflecting caution on the part of traders who believed to await clues as to the performance of blue chip firms.

The Tadawul All-Share Index (TASI) gained 0.56 percent last week, closing at 7,929.71 points from 7,885.52 points previous week. TASI is currently 0.05 percent lower than the year’s start. The weekly report of the Riyadh-based Bakheet Investment Group (BIG) observed gradual gains by small caps, particularly in the insurance sector, and warned that speculation in this sector “would negatively affect” the investors’ behavior and eventually jeopardize the market’s stability.

The BIG predicted a positive impact on the Saudi stock exchange as a result of a decision by the Capital Market Authority (CMA) last week to abolish the remaining restrictions on the right of citizens of the Gulf Cooperation Council (GCC) states to trade Saudi shares.

The insurance sector was in the limelight last week as shares of SABB Takaful jumped by 19.91 percent to SR189.75, Allied Cooperative Insurance Group (ACIG) by 13.66 percent to SR116.50, Saudi Arabian Cooperative Insurance Co. (SAICO) by 10.82 percent to SR107.50 and Saudi Indian Company for Cooperative Insurance by 9.54 percent to SR106.25.

Saudi Arabian Amiantit Co. and Saudi Automotive Services Co. (SASCO) shares dropped by 6.57 percent to SR32 and 6.31 percent to SR26, respectively.

The banking stocks were in positive territory last week. Shares of Banque Saudi Fransi surged 3.91 percent, Al-Rajhi Bank 3.29 percent and Arab National Bank 3.03 percent.

Samba Financial Group shares rose slightly to SR123.75 yesterday. The Kuwait-based Global Investment House (Global), meanwhile, has recommended “buy” on Samba stock with a medium term perspective.

Based on the current market price, Samba stock is trading at 14.2x of its 2006 earnings and 5.2x of its 2006 book value. On a year forward basis, the stock is trading at 13.8x 2007 earnings and 4.3x 2007 book value.

The combination of the revised projections and the revised cost of equity have led to a value of SR161 per share, which is higher by 30.9 percent as compared to the current market price. Based on a forward P/BV multiple of 3.87x 2007 projected book value for the Saudi banking sector, the peer valuation method results in a valuation of SR110 per share. Assigning an 80 percent weight to the DDM value, and a 20 percent weight to the relative value, the weighted average share value of Samba came out to SR150.8 per share. At the current market price, Samba’s share is quoting at a discount of 22.6 percent to its fair value. Hence, the Global maintained earlier recommendation of “buy” on Samba’s stock with a medium term perspective.

The stock market turnover, however, fell to SR20.09 billion last week compared to SR27.79 billion in the previous week.

Cautious optimism is expected to dominate Arab stock markets in the coming couple of weeks as investors prefer to stay on the sidelines pending the release of third quarter results, financial analysts said yesterday.

“I believe speculation and caution will prevail in the coming two weeks as investors monitor the third quarter corporate results to decide their portfolio positions for the coming period,” Amman-based analyst Wajdi Makhamreh said.

“However, regional markets stand to gain from low stock prices and soaring crude prices, which indicate that huge surplus petrodollars are expected to accrue to Gulf countries this year,” he added.

Jordanian stocks continued their steady performance last week, buoyed by leaks that listed firms, particularly blue chips, prepared to publish positive quarterly reports. The all-share price index of the Amman Stock Exchange gained 0.82 percent last week, to close at 5,727 points from 5,681 points, according to the ASE weekly report. Kuwaiti shares lost some ground last week as a result of profit-taking moves, breaking a rally that lasted for several weeks, analysts said.

The KSE all-share price index declined 0.3 percent last week, closing at 12,882 points from 12,925 points last week. The national all-share price index of the stock exchanges of Dubai and Abu Dhabi gained 1.0 percent last week, closing at 4,420 points compared with last week’s close at 4,375 points.

The GulfBase GCC Index also edged higher slightly to close at 5,576.86 points. The value of GCC traded shares, however, declined 11.38 percent to $10.57 billion but volume increased 31.82 percent to 5.10 billion shares.

BMG Saudi Index Keeps Upward Movement

The BMG Saudi Index sustained its upward movement over the past week, gaining 1.7 percent, having ended last week at 410.94 points. On the other hand, the total turnover during the week dipped to reach SR9 billion ($2.4 billion) compared to the previous week’s total value of SR11.8 billion ($3.15 billion), a decline of 23.8 percent. The decline was due to a number of factors, from Sunday’s holiday, to the lower than the average value traded throughout the week, which fell by 4.8 percent, In addition, the market seemed to lack some momentum, albeit that there was a decent rise over the week in the index. The average P/E ratio on 2006 earnings was 15.8 times, while the price to book ratio was 4.6 times.

Compared to last week’s close, the industrial sector outperformed all of the other sectors, although it strengthened marginally by 0.2 percent, with a total trading value of SR4.21 billion ($1.12 billion), equivalent to 46.9 percent of the index’s total week turnover. The other sectors did not see gains last week. The services sector dropped by 1.2 percent and traded a total value of SR2.94 billion ($0.78 billion) during the week, equivalent to 32.7 percent of the total index’s turnover.

The agricultural sector was the worst performer, going down by 1.8 percent and trading a turnover of SR1.54 billion ($0.41 billion) over the week, equivalent to 17.1 percent of the index’s total traded value.

A total of 177.22 million shares were traded during the week, of which, 7 performed positively, 21 declined and 2 remained stable. The National Metal Manufacturing and Casting Company, a constituent of the industrial sector, was the best performer for the second consecutive week, with its share price increasing by 16.3 percent to close at SR85.5.

The industrial sector’s stocks continue to show a positive performance over the week, with Al-Ahsa Development Company recording both the highest turnover and the highest number of traded stocks, executing a total traded value of SR876.12 million, to close the week at SR33.25.

Saudi Basic Industries Corporation (SABIC) closed last week at SR127.25.