JEDDAH, 22 April 2006 — Arab stocks continued their bearish trend last week despite good first quarter results reported by many listed firms, and financial analysts predicted yesterday that regional bourses would continue to be thwarted by a deepening plunge at the Saudi stock exchange.
However, they told Arab News that regional markets, particularly in the Gulf states, stood to benefit in the “long run” from a new round of surging oil prices that are expected to ensure huge surplus petrodollars for producing countries.
“Regional bourses have been affected by the nose-dive at the Saudi market over the past weeks because many of the Gulf investors are operating at several regional markets at the same time,” said Nabil Daaboub, head of trading at the Atlas Investment Group, the Arab Bank’s investment arm.
“Therefore, what happened at the Saudi stock exchange has prompted many investors to revise their positions,” he added.
He attributed the adamant decline on the Saudi market to a number of factors including the “instability of laws adopted by the Capital Market Authority (CMA)”. “The change of the daily volatility percentage twice in 30 days, for instance, has left a negative impact on the psychology of investors,” Dabdoub said.
The Tadawul All-Share Index (TASI) plummeted further 15.50 percent or 2,432.95 points last week, closing at 13,261.89 points down from 15,694.84 points previous week.
TASI is currently 20.6 percent lower than the year’s start.
The market turnover also dropped sharply to SR52.63 billion compared to SR95 billion in the previous week.
The petrochemical giant Saudi Basic Industries Corp. (SABIC) was most active by value as shares worth SR7.14 billion changed hands last week. SABIC shares plunged 18.58 percent in a week to close at SR241. Al-Rajhi Bank was second with value of traded shares reached SR4.86 billion last week. Its shares closed at SR415.
Saudi Electricity Co. (SEC) was most active by volume last week at 103,238,438, followed by Saudi Livestock at 42,051,648, Saudi Telecom Co. (STC) at 32,284,095 and SABIC at 28,430,049.
The Riyadh-based Bakheet Financial Advisors (BFA) expected investors to “re-evaluate their portfolios” in the light of the first quarter results so as to focus on firms with solid profits.
However, Saudi analysts voiced an optimistic tone over the past couple of days following assurances made by the Capital Market Authority (CMA) Governor Jammaz Al-Suhaimi, who expected Saudi stocks to make benefit from the country’s rising growth rate.
Al-Suhaimi disclosed new steps by the CMA in the coming weeks, including the assumption of closer supervision on investment funds and the issuance of licenses to experts who would be allowed to conduct financial analysis.
Kuwait’s KSE all-share price index shed 4 percent last week, closing at 10,326 points down from 10,756 points previous week.
The all-share price index of the United Arab Emirates bourses of Dubai and Abu Dhabi plunged 7.5 percent, closing at 5,245 points compared with last week’s close at 5,673 points.
Egypt’s Hermes all-share price index also fell 2.6 percent, to close on Thursday at 56,927 points down from 58,431 points previous week.
Jordanian shares rebounded strongly on Thursday led by the banking and services sectors particularly the heavyweight Arab Bank, dealers said.
The all-share price index of the Amman Stock Exchange gained 1.15 percent last week, closing at 7,065 points, up from 6,985 last week, according to the ASE weekly report.
“Despite predictions that the market would continue the upward trend, I believe we are going to witness profit taking at a certain juncture next week,” Daaboub said.
