JEDDAH/AMMAN: Saudi shares plunged for the third week in a row with the negative sentiment already created by falling oil prices aggravated by the news that Lehman Brothers was heading to bankruptcy.
The Tadawul All-Share Index (TASI) plummeted 9.11 percent last week, closing at 7,387.25 points compared to 8,128.10 points the previous week. TASI is currently 33.1 percent lower than the year’s start.
The Riyadh-based Bakheet Investment Group (BIG)said in its weekly report the negative sentiment “to ease” in the coming weeks in light of the corrective measures taken by the US administration, the fall of prices to buy levels and the approaching third quarter results of listed firms.
Shares in Methanol Chemicals Co., which started trading last week, jumped 28.33 percent to close at SR15.40. The insurance sector suffered badly last week. Al-Ahlia Insurance Co. shares plunged by 25.90 percent to SR38.90, Allied Cooperative Insurance Co. by 25.55 percent to SR38.90, Saudi IAIC Cooperative Insurance Co. by 25 percent to SR75, and Saudi Arabian Cooperative Insurance Co. by 20.95 percent to SR41.50.
The stock market turnover was over SR22.64 billion last week. Saudi Basic Industries Corp. (SABIC) was most active by value as over SR3.38 billion worth of shares changed hands last week. SABIC shares closed 6.77 percent down at SR106.75. Arab stock markets tumbled last week in response to the collapse of Lehman Brothers, and financial analysts said yesterday they did not exclude further repercussions on regional markets. “The direction of markets is unclear,” Nizar Taher, chief of brokerage at the Jordan Ahli Bank said. “Arab markets reacted violently to latest developments in the United States, an indication that there are investors who work in the two regions,” he said. “We believe that investors in the region will assume caution in the coming weeks, looking out for any new offshoots of the turmoil,” he added.
Jordanian shares also suffered heavily last week mainly due to the reference of at least eight firms dealing with foreign bourses to court on suspected fraud. “We also think that foreign investors, particularly from the Gulf region, have been selling their holdings of Jordanians stocks to cover their positions elsewhere,” Taher said. The all-share price index of the Amman Stock Exchange shed 3.65 percent last week, closing at 3,861 points, according to the ASE weekly report.
Kuwait’s KSE all-share index fell 3.6 percent last week, closing at 12,658 points. The benchmark price of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi, plunged 7.3 percent this week, to close at 4,502 points.
Egypt’s CASE-30 index, which measures the performance of the market’s 30 most active firms, tumbled 14.5 percent this week, closing at 7,066 points.
The GulfBase GCC Index also declined 6.71 percent to 5,312.80 points. The value of GCC traded shares, however, surged by 13.75 percent to $12.94 billion and volume increased by 34.90 percent to 4.77 billion of shares.
Negative performance
The BMG Saudi Index ended the week on a negative note, recording the third successive week-on-week decline. By the end of the week, the BMG Index had fallen by 8.8 percent week-on-week, losing 38.44 points to close at 400.06 points. The total market turnover also depreciated by 15.1 percent to reach SR9.9 billion ($2.6 billion) compared to SR11.6 billion ($3 billion), registered last week. The number of shares traded also went down by 4.1 percent from 251.1 million shares to 241.2 million shares. The average price-earnings (P/E) ratio for 2007 earnings was 19.6 times, while the price-to-book (P/B) ratio was 4.0 times.
All the sectors recorded losses last week. The worst performer for the third successive time was the Industrial sector, plunging by 9.5 percent and sharing the same percentage drop as the services sector. The Insurance sector deteriorated by 8.9 percent, the Banking sector by 7.4 percent, whilst the Telecommunications sector suffered a drop of 7 percent.