JEDDAH, 17 September — A sudden drop in the Saudi stock market that saw shares tumble by varying levels when trading opened Saturday has been attributed to psychological rather than outside factors. Analysts said since the Saudi bourse is not directly linked to the international market, the attacks on the United States which led to the closure of US markets could not have affected the Saudi bourse.
On Sunday the situation improved for some sectors although others continued to lose in value. The improvement was especially felt by the banking sector where many banks gained on Sunday’s trading.
Traders said when trading closed on Saturday, the shares lost 4.7 percent of their value since Saturday and 7.2 percent since last Monday. The share index closed at 2,357.13 points against 2,472.56 points when the market closed on Thursday.
The drop affected shares of all major banks and utility firms with losses ranging from SR13 to SR40 per share.
On Sunday the market gained some of the ground it lost at the beginning of the week and banks like Al-Jazirah, Saudi French Bank and Al-Rajhi Bank have all made some gains. Al-Jazirah which saw its share drop to SR101 was yesterday trading at SR103. Al-Rajhi which suffered significantly with its share losing SR40 to sell at SR714 on Saturday closed at SR720 the following day. The Saudi French Bank which lost SR5 closed yesterday at SR319.50 against SR318.50 on Saturday.
Analysts said they had no explanation as to why the drop happened at this time apart for psychological considerations in the aftermath of last week’s devastating attacks against the World Trade Center in New York and the Pentagon in Washington.
Investors expected the drop to be temporary and said the market would gradually return to normalcy.
Saudi Minister of Finance and National Economy Dr. Ibrahim Al-Assaf has said the effect of the bombing operations in the US on Western financial markets will be temporary. He said it is not expected that the attacks could have negative effect on the Saudi economy.
“The major elements influencing the Kingdom’s economy are domestic factors. When it comes to the economic growth and financial stability these factors are continuing (without change) and we do not expect negative effect on the Kingdom’s economy,” the minister said Saturday in Riyadh.
He said the status of Saudi banks is excellent and liquidity is high and (money) transfers are proceeding as usual where there are no obstacles in the face of transfers and methods of payment.
Dr. Al-Assaf expected positive growth results for the Saudi economy this year and expected an increase in the flow of investments into the Kingdom saying Saudi Arabia is heading toward large investments especially in the gas sector and related industries together with tourism and other important areas.
Economists have said they did not expect an immediate impact on the Saudi economy by the continuous market dislocation as long as oil prices are gaining.
Saudi industrial companies sustained the bulk of losses incurred by the stock market over the past two days. Firms like SABIC (Saudi Basic Industries Corporation) Savola and National Industrialization have all lost when their shares were put for trading on Saturday. However, they managed to regain some of the losses although the shares traded at lower rates than the previous day. On Saturday SABIC share lost SR7, Savola retreated to trade at SR181 (against SR179 on Sunday) while the National Industrialization share closed at SR47.35 on Saturday against SR45.75 the following day. Cement companies, too, experienced losses. Arab Cement traded at SR167 yesterday against SR168 on Saturday and Eastern Cement SR240 against SR242.50 over the 24-hour period. Tabuk Cement, however, gained slightly in yesterday’s trading selling at SR80.75 compared to SR80.50 the previous day.
Utility shares also went back with SCECO-Central losing SR4 to sell at SR74. The price remained unchanged yesterday. There has been limited trading on the agricultural sector with Hail Agricultural selling at SR24.25 yesterday up from Saturday’s SR23.25 price.
