JEDDAH, 15 April 2006 — Arab stock markets are expected to maintain their cautious approach in the coming couple of weeks with offshoots from a historic Saudi nosedive leaving their impact on investors throughout the region, analysts said yesterday.
“I believe the plunge at the Saudi stock market last week will continue to affect other regional bourses,” an Amman-based portfolio manager said. “In addition, I think investors will be monitoring more first-quarter results in order to decide what positions to take. This means trading in the coming weeks will focus on selective shares with promising performance.”
However, the analyst said the Saudi stock market and other Arab bourses would “benefit in the long run” from surging oil prices and the subsequent huge surplus petrodollars.
The Tadawul All-Share Index (TASI) plummeted 11.5 percent last week, closing on Wednesday at 15,694.84 points down from 17,665.07 points previous week. The market was closed on Thursday.
The TASI is currently 6.4 percent lower than the year’s start.
The stock market turnover also declined last week to SR95 billion compared to SR110.39 billion in the previous week.
The Saudi Electricity Co. (SEC) was most active by value as shares worth SR8.3 billion changed hands last week, followed by Saudi Telecom Co. at SR6.55 billion, Saudi Basic Industries Corp. at SR.6.48 billion, Al-Rajhi Bank at SR5.68 billion and Savola Group at SR4.23 billion.
The Saudi stock exchange was the scene of certain irregularities last week, including a crackdown on price manipulators by the bourse’s watchdog, the Capital Market Authority (CMA), and the suspension of trading due to a glitch.
The Saudi bourse witnessed its biggest daily loss ever on Monday, when the TASI slid 8.3 percent due to a sell-off of speculative stocks that gained 50 percent since March.
“It seems that a misunderstanding of the Council of Ministers’ decision to split stocks, the CMA’s decision to move the daily volatility band up to 10 percent and daily rumors have prompted investors to behave irrationally by focusing on speculative stocks and ignoring stocks with good fundamentals,” the Riyadh-based Bakheet Financial Advisors (BFA) said in its report. “We want to warn traders against random speculation, investment in companies with weak positions and following rumors.”
Kuwait’s KSE all-share price index gained 2.4 percent last week to close at 10,756 points, up from 10,508 points previous week.
Kuwaiti stocks were also affected by the plummeting prices at the Saudi market, but strong first-quarter profits achieved by leading Kuwaiti businesses apparently helped to overcome the negative factors, an Amman-based analyst said.
The all-share price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi shed 5.2 percent last week, closing at 5,673 points compared to 5,983 points last week.
Egypt’s Hermes all-share price index fell 2.2 percent this week, closing at 58,431 points down from 60,436 points last week.
Jordanian shares appeared to have been affected by the turmoil on the Saudi market.
The all-share price index of the Amman Stock Exchange shed 2.02 percent, crashing the psychological level of 7,000 points and closing on Thursday at 6,985 points, down from last week’s close at 7,129 points.
“The market is dominated by a mood of caution with investors awaiting the revelation of more first quarter results by listed firms,” said Ramzy Nazal, CEO of the Osoul brokerage firm.
