RIYADH/JEDDAH, 15 March 2006 — The Supreme Economic Council (SEC), chaired by Custodian of the Two Holy Mosques King Abdullah, yesterday reviewed the stock market situation and supported the measures taken by the Capital Market Authority (CMA) to protect investors.
“The SEC meeting discussed the sharp decline of the stock market index after a sharp rise,” the Saudi Press Agency said, adding that the council expressed its confidence in the strength of the economy and its ability to grow further.
Expressing its confidence in Saudi companies, the SEC said investment in them would help boost the Kingdom’s progress and prosperity. It urged investors not to run after rumors and wrong information. “You have to take investment decisions on a sound basis,” the council told Saudis.
“The council offers its full support to the measures already taken and those to be taken by the Capital Market Authority to protect investors, especially small investors,” the SEC said in a statement. The council also assured investors that it would regularly follow up developments in the market.
Earlier, Finance Minister Ibrahim Al-Assaf, said the government would not intervene nor take any action as a result of the recent crash in the stock market.
“It is totally baseless that we will intervene, whether by buying or selling. The government does not intervene in decisions taken by investors on the Saudi stock market,” the minister said.
He also denied reports in some Saudi newspapers that the government would open some public investment portfolios in the social security and retirement sectors in order to reverse the market’s fall.
Al-Assaf said that what was happening to the stock market was that it was in a correction phase. He told Saudi Arabian Television: “It is in a correction phase at the moment after large unexplainable profits. And as there was a steep increase, there is now a steep decline.”
He went on to say, however: “Investing, selling, and buying are matters that involve individuals.” The minister said the crash in the Saudi stock market did not mean that the Saudi economy was unsteady. Domestic growth remained constant and the Saudi economy was strong. According to official statistics, the Saudi stock market has lost more than SR800 billion in the past three weeks, causing Kingdom-wide panic.
When the stock market opened yesterday, it lost 750 points within minutes of its opening. At close, the Tadawul All-Share Index (TASI) was 741.65 points, or 4.74 percent, below Monday’s closing, at 14,900.04 points.
Faisal H. Alsayrafi, president and CEO of Financial Transaction House (FTH), told Arab News: “The correction in the stock market will carry on until the TASI reaches 10,000 points.
“However, the index will start growing steadily with the performance of the companies until it reaches to the point where it will match the market price with the earning levels.”
Arab News has learned that the CMA took extra security measures around its premises in the capital yesterday fearing demonstrations at its gates.
