JEDDAH, 23 September 2006 — Saudi stocks continued to drop last week. After plunging 214.41 points in the previous week, the Tadawul All-Share Index (TASI) slipped 1.18 percent, closing 132.18 points down at 11,108.35 points last week from 11,240.30 points in the previous week.
TASI is currently 33.5 percent lower than the year’s start.
The Saudi stock market witnessed last week dumping of speculative stocks, which continued to suffer following unjustified rises in the previous weeks, the Riyadh-based Bakheet Financial Advisors (BFA) said in their weekly report. “It seems that many investors have disposed of stocks with weak financial ratios ahead of the Q3 results of listed firms,” BFA added. The BFA expected profits realized by blue chip firms to “remain the major factor determining the market’s trend”.
Meanwhile, the speculative grade stocks face “further retreat due to their record rise that was not based on investment fundamentals”, BFA said.
The stock market turnover also declined last week. Over SR99 billion worth of shares changed hands compared to SR163.45 billion in the previous week.
Shares of six banks rose, while four were in the negative territory last week.
Saudi Basic Industries Corp.’s shares were also closed lower at SR134.50.
In the telecom sector, shares of Saudi Telecom Co. (STC) and Etihad Etisalat fell last week.
Arab stocks also retreated last week in what financial analysts described yesterday as deep profit-taking moves ahead of the fasting month of Ramadan.
They also cited caution on the part of investors before the release of third quarter results as one of the factors due to affect markets in the coming couple of weeks.
“We believe that there have been a sell-off and a change of positions on the part of many investors ahead of the month of Ramadan that usually witnesses sluggish trading,” an Amman-based portfolio manager said. “We think that prices will go down further in the first two weeks of Ramadan, after which shares will provide a buy opportunity that sparks rebounds throughout Arab bourses,” he added. The all-share price index of the Amman stock exchange shed 3.4 percent, to close week on Thursday at 6,099 points, down from 6,318 previous week, according to the ASE weekly report.
Analysts said they expected Jordanian shares to pick up, led by real estate and financial services firms, after prices went down to levels that encourage buying. Kuwait’s KSE all-price index closed week at 10,033 points, which represents a 0.5-percent rise over its previous week’s close at 9,984 points.
“We consider the market’s close over 10,000 points a positive gesture that indicates good investors’ expectations for profits of listed firms in the third quarter,” said Jassem Zeraai of the National Bank of Kuwait.
In the United Arab Emirates, the all-share price index of Dubai’s stock exchange suffered one of its sharpest losses this week, shedding 7 percent and closing at 425.24 points, compared to last week’s close at 456.39 points.
Analysts were optimistic that this decline would spur a rebound, as low prices would encourage investors to step in to purchase stocks. Egypt’s Hermes all-share price index gained 3.4 percent, closing week at 56,273 points from 54,428 points last week.
