JEDDAH, 8 October 2005 — The Saudi stock market witnessed a sharp drop last week following “weeks of unjustified rise of most of listed firms, especially speculative stocks.”
The Tadawul All Shares Index (TASI) fell 3.24 percent from last week, closing on Thursday at 14,543.02 points compared to previous week’s close at 15,029.96 points. However, the index recovered 245.34 points or 1.72 percent on Thursday from Wednesday’s 420.14 points drop.
But TASI is currently 77.2 percent higher that the year’s start, the Bakheet Financial Advisors (BFA) said in their weekly report. The prices of 10 companies advanced, 66 companies retreated while 1 firm closed unchanged, the report added. The BFA expected the third quarter results of blue chips, particularly petrochemical companies, to “remain the major determinant of index movement” in the coming weeks. However, they expected fresh retreat in the prices of speculative stocks especially after the publication of their results later this month, which are widely expected to be “negative”.
Food Products Co. was top gainer for the week at SR264, up 16.56 percent, followed by Eastern Agriculture by 15.30 percent at SR309, Jarir Marketing Co. by 7.21 percent at SR1,115, Saudi Chemical Co. by 6.61 percent at SR366.75 and Ahmed H. Fitaihi Co. by 5.03 percent at SR334.
However, shares of Saudi Industrial Development Co. plunged by 16.44 percent in a week to close at SR246.50, followed by National Agriculture Marketing Co. by 15 percent at SR246.50, Filing & Packaging Materials Manufacturing Co. by 14.11 percent at SR408, National Gypsum Co. by 10.29 percent at SR1,085 and Tihama Advertising & Public Relations Co. by 10.19 percent at SR275.50.
Dr. Tarek Kaushek, a financial analyst, said the decline of share prices of Saudi Land Transport Co., National Agriculture Marketing Co. and Food Products Co. were expected as their profits were exaggerated. But he wondered why the prices of the Saudi Chemical Co., which posted a second quarter profit of SR456 million, 345 percent more than last year, went down 9.94 percent on Thursday. He advised small investors not to sell their strong stocks under pressure from big players in the market.
Saudi Basic Industries Corp. shares dropped 5.31 percent in week to close on Thursday at SR1,556.75.
Shares of Saudi Telecom Co. and Etihad Etisalat also fell by 3.13 percent at SR904.75 and by 2.70 percent at SR604, respectively.
Saudi Electricity Co. shares declined by 2.49 percent in week to close on Thursday at SR137.
In Kuwait, the KSE all-share price index gained 2.8 percent last week, closing at 10,515 points from 10,233 points previous week.
The start of the month of Ramadan also left its impact on the United Arab Emirates stocks, which shed an average of 2.2 percent. The benchmark prices of the Abu Dhabi and Dubai bourses dropped respectively by 2.2 percent and 2.3 percent, closing at 5,350 points and 1,135 points.
“The retreat at the UAE stock markets reflects concerns with investors that sluggish trading will persist throughout the month of Ramadan,” a Dubai-based analyst said.
Other Arab stock markets also slipped in thin trading last week. “It is natural for most of investors to keep away from the market during the month of Ramadan and this year was not an exception so far,” Saqr Abdul Fattah, Investment Manager at the Housing Bank for Trade and Finance, Amman, told Arab News. “However, we expect activity to pick up at regional stock markets in the last two weeks of the fasting month, thus repeating what happened last year, when third quarter results created a momentum at various bourses,” he said.
The all-share price index of the Amman Stock Exchange shed 2.36 percent in the week ending on Thursday, to close at 7,660 points down from 7,845 points previous week, according to the ASE weekly report.
Abdul Fattah attributed the decline to a profit-taking move that coincided with the start of the month of Ramadan on Tuesday in almost all Middle East countries.
Fasting usually forces businesses to curtail their activity and working hours, dealers said.
However, Abdul Fattah expected fresh surplus petrodollars to arrive at the Jordanian stock market and other bourses in the area in the coming weeks as a reflection of the huge increase in incomes of oil-rich countries.
— With input from Abdul Jalil Mustafa
