JEDDAH, 14 March 2006 — Saudi stocks plunged to new lows yesterday, sending shockwaves among investors as Shoura Council members urged intervention by the Finance Ministry and the governor of the Saudi Arabian Monetary Agency (SAMA) to prevent a market crash.
Muhammad Al-Qunaibet, a Shoura member and deputy chairman of the Committee for Economic and Energy Affairs, asked the council to call Finance Minister Ibrahim Al-Assaf to explain the worsening stock market situation.
“Such a move is essential to allay fears of the public over the unjustifiable stock market crash,” Al-Qunaibet told a weekly meeting of the 150-member Shoura Council. “What is happening now at the stock market is not a correction but a crash,” he added.
Abdul Rahman Al-Mushaikeh, another Shoura member, backed Al-Qunaibet’s statements and urged top government officials to calm investor worries and mobilize public confidence in the market.
“Saudis need reassuring statements from responsible officials about the present situation of the market,” Al-Mushaikeh told the Shoura meeting.
Another Shoura member and deputy chairman of the Finance Committee, Osama Kurdi, called for the intervention by all departments and agencies concerned to confront the stock market crisis.
“The finance minister and the CMA (Capital Market Authority) chairman have been called to the Shoura to explain measures taken to prevent a repeat of sharp fluctuations. We will also give some proposals to stabilize the market and punish those involved in worsening the crisis,” said Abdul Aziz Al-Oraiar, another Shoura member.
Financial analyst Yousuf Al-Qustanteen called the stock market plunge a full-fledged crash. “Downfall of stock markets anywhere in the world by more than 25 percent would be considered a market crash,” he said, adding that the total loss by the Tadawul All-Share Index (TASI) since the beginning of the downward trend had reached 27 percent.
The TASI declined 789.58 points or 4.81 percent to close yesterday at 15,641.69 points. The index has shed 6.41 percent so far this year after closing at 16,712.64 points on Dec. 31, 2005 after surging over 103 percent in that year. All 78 stocks on the TASI were in the red yesterday.
The Banking and Industrial indexes dropped heavily. The Banking Index plummeted 1,949.19 points at 40,770.80 and the Industrial Index fell 1,860.27 points at 35,817.64.
The market turnover, however, rose slightly to SR10.89 billion yesterday from SR7.20 billion on Sunday.
SABB shares plunged 4.99 percent to SR1,448, Al-Rajhi Bank by 4.98 percent to SR2,177, Bank AlJazira by 4.98 percent to SR1,525, Bank Albilad by 4.95 percent to SR711 and Riyad Bank by 4.92 percent to SR618.
Shares of Almarai Co. and the newly listed Yanbu National Petrochemical Co. (YANSAB) fell by the maximum limit of 5 percent to SR798 and SR437, respectively.
YANSAB shares soared 1,122 percent on debut on the Saudi stock market on Feb. 20 this year. YANSAB shares, with a face value of SR50, opened at SR725 and reached as high as SR750 before closing at SR611 on the first day of trading.
In the industrial sector, shares suffered heavy losses yesterday. The bellwether Saudi Basic Industries Corp. (SABIC) shares dropped 4.93 percent to close at SR1,387. Over SR1.08 billion worth of SABIC shares changed hands yesterday.
Saudi Electricity Co. (SEC) was most active by volume at 7,902,926 as its shares dropped 4.91 percent to SR155.
In the telecom sector, shares of Saudi Telecom Co. (STC) and Etihad Etisalat edged lower by 4.95 percent and 4.90 percent to SR884 and SR602, respectively.
