AMMAN, 30 July 2005 — Arab stocks are expected to derive backing from the good performance of blue chips in the first half of the year as investors prepared to build up new positions in accordance with the second quarter results of listed firms, analysts said yesterday.
They told Arab News that a spate of corrections and profit taking moves that plagued regional markets over the past few weeks had driven prices down to levels where they provided a “buy opportunity”.
“I believe that prices have gone down to levels attractive for buying,” Wajdi Makhamreh, investment manager and head of brokerage at the Jordan Finance & Investment Bank, said. “Recent deep profit taking moves were necessary for correcting prices of stocks that became overvalued over the past weeks. This will encourage investors to build up new positions according to the profits realized by firms in the first half of the year,” he added.
The Amman Stock Exchange was a scene this week for violent fluctuations with the Arab Bank taking the lead in sharp ups and downs. The volatility was triggered by expectations that the renowned Arab banking institution planned to distribute a 0.25 share and a subsequent denial of the news by the bank’s management.
The ASE all-share price index gained 0.97 per cent in the week ending on Thursday to close at 7,806 points up from 7,732 points last week, according to the market’s weekly report. Following weeks of losses, Saudi stocks notched strong gains this week, buoyed primarily by the Saudi Basic Industries Corp. (SABIC) which climbed 9 per cent following reporters that the conglomerate had achieved strong profits in the first half of the year, according to the Bakheet Financial Advisors (BFA).
The Tadawul All Shares Index (TASI) of the Arab world’s largest bourse climbed 5.7 per cent this week, closing at 12,876.60 points up from 12.177 points in the previous week. TASI is currently 56.7 per cent higher than the year’s start, the BFA said in their weekly report.
The report expected the Saudi market to remain “volatile” in the coming few weeks, with profit taking intervals taking place particularly on stocks the prices of which surged in the past weeks.
“Meanwhile, we expect speculative stocks to witness a strong corrective retreat after the recent high and unjustified levels they reached,” the report said. In Kuwait, the all-share KSE index gained 1.6 per cent this week, to close at 8,950 points, compared to last week’s close at 8,807 points. Kuwaiti shares received support from the confirmation of a $1.4-billion contract concluded earlier between the US Defense Department and the Kuwaiti firm, the Public Stores Co., dealers said.
