JEDDAH, 22 February 2006 — After months of upward movement, the Saudi stock market finally crossed the 20,000 mark to hit a record high yesterday. The Tadawul All-Share Index (TASI) closed to an all-time high of 20,061.69, up 137.91 points from Monday’s closing.
The market turnover was over SR45.85 billion yesterday.
Surprisingly, the shares of the newly-listed Yanbu National Petrochemical Co. (YANSAB) fell 6.22 percent to close at SR573 after rising by 1,122 percent on debut on Monday.
The shares of the largest IPO in the Kingdom were expected to show more performance and to trade at much higher prices.
The shares contributed, however, to the climb of the TASI index.
Salim J. Ghalayini, a Riyadh-based Investment/Financial Consultant, told Arab News that “the Saudi stock market crossed the ‘visible’ milestone of 20,000 yesterday, thus leading to an outstanding year-to-date performance. The superior performance of YANSAB IPO on Monday, played a major factor in Tuesday’s increase of the overall Saudi index.”
“The outlook of the Saudi market continues to be positive based on an impressive government budget, commitment to many large projects, on top of a huge budget surplus. The high liquidity is too big to be absorbed by internal business projects alone, and accordingly much of it finds its way to the stock market,” he added.
In addition to long-term investments in the market, the above success has attracted many speculators and possibly few “market manipulators”.
Ghalayini said, “Speculation and manipulation is dangerous to any stock market. Although speculation increases the price of shares in the short term - make some people happy, but it places high business performance expectations on the respective companies.”
According to Ghalayini, such companies have to increase their profitability to meet the high expectation and share price; otherwise their shares will eventually dive. If speculations continue for a long time without control, it will initiate a “stock market bubble”, the results of which are very dangerous.
“The CMA (Capital Market Authority) has done a good job so far in monitoring and clamping down on “illegal” trades,” he said, “but the challenge is growing by the day and good control by the CMA will delay a market bubble from forming.”
All the market’s indexes went up yesterday except for the Banking, Industrial and Telecommunication indexes.
The major Banking and Industrial Indexes dropped yesterday at 47,080.46 and 48,030.06, respectively.
In the banking sector, shares of Bank Albilad and Bank AlJazira rose slightly while shares of all other banks declined.
In the industrial sector, shares of major companies such as Saudi Basic Industries Corp., Zamil Industrial Investment Co., Saudi Arabia refineries Co. and Al-Ahsa Development Co. edged lower while shares of Food Products Co., Saudi Advanced Industries Co., Amiantit Co., Filling and Packing Materials Manufacturing Co., Saudi Chemical Co. and Almarai Co. made hefty gains.
Most of the cement companies were in the red yesterday.
Only Tabuk Cement, Yanbu Cement and Southern cement were in a positive territory.
The Services Index was higher by 427.34 points at 8,159 as most of the stocks were in black.
Saudi Electricity Co. (SEC) shares jumped 9.95 points to close at an all-time high of SR221.
Over SR2.97 billion worth of SEC shares changed hands yesterday.
The Insurance Index closed 205.29 points higher at 2,774.23 as shares of the National Company for Cooperative Insurance (NCCI) rose 7.99 percent to touch the SR1,000 mark yesterday.
In the telecom sector, shares of Saudi Telecom Co. and Etihad Etisalat fell to SR1,142 and SR755, respectively.
The Agriculture index rose 605.23 points to 14,741.49 as shares of all listed companies in the sector increased yesterday except for those of the Saudi Fisheries.
