RIYADH, 19 January 2006 — Late gains by heavyweight Saudi Basic Industries Co (SABIC) nudged Saudi shares higher yesterday as the market waited for blue chips to report 2005 results. The all-share index closed 0.21 percent higher at 17,635.3 points. Turnover stood at SR29 billion ($7.7 billion), almost unchanged from Tuesday.
Analysts have said strong oil prices and expectations of strong corporate earnings could propel the market higher. But they have voiced concern that a lack of share offerings to absorb abundant liquidity may produce a sharp correction in the market, whose index broke through the 17,000 points level for the first time early in January.
“The market is in wait-and-see mode pending the announcement of major firms’ corporate results for 2005. At the same time, there is fear of a possible correction after its strong rally,” a senior trader said. “This explains the somewhat erratic movements in the market which is in a constant profit-taking and bargain-hunting cycle.”
The Arab world’s largest bourse rose 104 percent in 2005 in a rally fuelled by record oil revenues, improved macro-economic indicators in the world’s top oil exporter and a generous hike in public-sector wages. “SASI should keep moving up and down within a 0.5-1.0 percent bracket pending the publication of the results, mainly for blue-chip stocks to provide some visibility,” said Hisham Abu Jamea, chief financial analyst for Bakheet Financial Advisors brokerage. “Until then, investors will continue to reap profits and hunt for bargains,” he added.
