RIYADH, 10 June 2003 — Saudi shares surged yesterday to close at a record high amid unprecedented trading on the back of a strong oil market and abundant cashflows which boosted investor confidence, analysts said.
The Tadawul All-Shares Index (TASI) rallied to finish at 3,599.01 points, a new record, up 161.86 points or 4.7 percent on Sunday’s close. The day also set new highs in the volume and value of shares traded.
The TASI is now 42.9 percent higher than at the start of 2003. It has been rising steadily since the start of the war against Iraq on March 20, increasing 42.1 percent since then. It has risen 10.9 percent since last week.
“Interest rates are very low and more funds are being invested in the stock market. This is coupled with abundant cashflow,” said Ali Dakkak, of King Abdul Aziz University’s Economics Department.
“The oil market has been very stable and the Organization of Petroleum Exporting Countries (OPEC) has gained added strength recently. Revenues from oil have also increased,” Dakkak added. “These factors have considerably boosted investor confidence in the Saudi stock market,” he told AFP. Yesterday’s rally was spearheaded by the three market leaders, Saudi Telecom, Saudi Basic Industries Corp. (SABIC) and Saudi Electricity Company (SEC), which increased 9.94 percent, seven percent and 9.8 percent, respectively.
Saudi Telecom has gained a remarkable 122.8 percent since Jan. 25 when its shares began trading following its partial sell-off. SEC has gained 84.1 percent since the start of 2003. Together, Saudi Telecom, SEC, SABIC and the nine listed banks make up more than 80 percent of the market’s value.
“High corporate profitability in the first quarter and expectations of even better dividends at mid-year have made demand very high on these shares,” Dakkak said.
Prices of 21 firms increased, 36 companies dropped, while seven issues were unchanged. Five companies did not trade.
Trading value was SR6.96 billion ($1.85 billion), while 47.4 million shares changed hands in 24,200 trades, both new records.
Saudi Arabia is the largest capitalized stock market in the Arab world with more than $126.8 billion, but operates only on interbank system.
