AMMAN, 31 July 2004 — A spate of “speculation” is expected to continue as the key driving force at Middle East stock markets in the coming weeks, due to the availability of Arab funds chasing speedy profits, financial analysts said yesterday.
However, they said the formation of an Arab or Islamic force in Iraq as suggested by Saudi Arabia could have a “positive impact” on regional bourses.
“I believe speculation represents the major driving force at most of regional bourses, due to the presence of high liquidity,” Mohammad Hassan, head of investment at the United Financial Investments Co., told Arab News.
“Therefore, the market direction seems to me unpredictable, as investors prop up prices and later push them down in profit-taking,” he said. “This behavior cannot be justified on fundamental or geopolitical basis,” he added.
Another portfolio manager predicted the dispatch of an Arab or Islamic force to Iraq “will reflect positively on regional stock markets because it will improve security and speed up the awarding of reconstruction projects”.
Despite the positive mood still dominating the Amman Stock Exchange, a profit-taking move blocked a rise in the all-share ASE price index, which ended trading week on Thursday almost unchanged, at 2,916 points compared with 2,918 points last week.
“Despite the fact that companies listed on the ASE showed impressive results for the first half of the year, investors were more tempted by profit taking opportunities causing stock prices to retreat,” the Atlas Investment Group, the investment arm of the Arab Bank, said in its weekly report.
In Saudi Arabia, stocks kept up their upward trend. The market’s all-share price index gained 2.3 percent for the fourth week in a row, to close on Thursday at 6,181.18 points, up from last week’s close at 6,041.70 points, according to the market’s weekly report.
In Kuwait, the KSE index also rose 0.6 percent this week, closing at 5,633.3 points, despite a traditional decline in activity during summer times when most of traders are outside the country for vacation.
“We still believe Kuwaiti shares will score fresh gains in the coming weeks, buoyed by rising oil prices and the atmosphere of optimism brought about by Prime Minister Sheikh Sabah Al-Ahmad Al-Sabah’s trip to Japan, China and Southeast Asia,” an Amman-based analyst said.
He noticed that as a result of the tour, a Kuwaiti-Chinese holding company has been proposed with a $200 million paid-up capital.
