JEDDAH, 13 April 2008 — After gaining 3.5 percent last week, Saudi stocks continued their upward movement yesterday. The Tadawul All-Share Index (TASI) edged higher by 50.92 points to 9,552.63. The stock market turnover was over SR9 billion yesterday. Fawaz Abdulaziz Al-Hokair Co. shares jumped by 8.84 percent to SR61.50 yesterday. The biggest loser yesterday was The National company for Glass Industries as its shares plunged 4.86 percent to SR63.50.

The Saudi Stock Exchange announced yesterday that the bonus shares of National Metal Manufacturing and Casting Co.(Maadaniyah) and Saudi Arabia Fertilizers Co.(SAFCO) have been deposited into applicable investor’s portfolios yesterday by granting one share for every four shares owned by the shareholders registered in the shareholders record by the end of April 7, 2008.

Halwani Brothers is gearing up to offer shares to Saudi investors after getting approval from the Capital Market Authority (CMA). CMA has approved Halwani’s initial public offering of 8,571,430 shares, representing 30 percent of the company’s total stock. The company’s shares will be offered from June 21-30 upon the completion of the book-building process.

Samba Capital, manager of the IPO of Alinma Bank, said yesterday that Saudis have so far invested SR6.58 billion in the IPO, purchasing 63 percent of the 1.05 billion floated shares.

Meanwhile, according to NCB Capital research, portfolios of any Saudi Arabian fund which follows an “enhanced benchmark” investment style are dominated by large cap companies (just 10 companies dominate 67 percent of aggregate market cap). Thus an investor would benefit from a more focused vehicle that could identify investment opportunities amongst the 43 mid cap companies that comprise the next 28 percent of the market.

Mid caps historically dominated volumes and market cap. The scene changed in 2007 as several new IPOs added a number of new companies to small caps.

The study prepared by Bryan D’Aguiar, head of equity research at NCB Capital, said Saudi Arabia’s aggregate market cap grew by 35 percent between 2003-07 to SR1.95 trillion. Large cap stocks grew by 43.6 percent to SR1.32 trillion during the same period while mid cap stocks increased by 22.8 percent to SR540.5 billion by market cap.

The report added of the 111 companies listed on the Tadawul at the end of 2007, 43 were mid caps (39 percent of the total number of listed companies) while 10 were large cap stocks (mostly in the banking sector). Small cap stocks at 58 represented the majority of listed companies.

The mid cap segment increased by 8 companies over the 2006 while in 2005 the steep valuations of the Saudi markets pushed a number of small caps into the mid cap definition.

Mid cap segment is defined as companies which have market capitalization between SR3 billion and SR50 billion.

Mid cap stocks have lagged behind large cap stocks in terms of market cap growth. Though their performance has been less spectacular, mid cap stocks have grown steadily. In contrast large cap stocks performed worse than mid caps during the corrections of 2006.

The study said mid caps stocks currently provide a dividend yield of 1.7 percent against 3.6 percent for large caps and return on assets for mid cap companies at 3.8 percent lag large caps at 7.1 percent in 2007.

Mid caps have a high concentration of industrial and services sector companies while large caps have a big concentration of banking stocks.

The NCB report said there were a total of 46 IPOs during 2003 to March 2008, out of which 14 companies were mid cap companies. Due to regulatory changes in the sector most of the IPOs since 2007 have been in the insurance sector, all of which were in the small cap space.

Across sectors, mid cap companies exhibited better performance on the basis of annualized returns of market capitalization since their flotation.

The annualized returns of small cap insurance stocks is higher than that of mid cap insurance stocks.

The report said mid cap IPOs have consistently generated superior returns over small and large cap IPOs and some of the small and mid cap stocks have risen by more than 10 times from the listing price.