JEDDAH/AMMAN, 7 October 2006 — The Saudi stock market witnessed a series of downward corrections last week, with the Tadawul All-Share Index (TASI) slipping under the 11,000-point level for the first time in two months.
The market’s benchmark price shed 3.23 percent last week to close at 10,862.64 points, down from 11,225.28 points previous week.
TASI is currently 35 percent lower than the year’s start. The stock market turnover, however, increased slightly to SR107 billion from SR97 billion in the previous week.
Saudi Industrial Services Co. was most active by value last week at SR6.43 billion, followed by Saudi Electricity Co. at SR6.38 billion.
About 10 million Saudis, more than half of the Kingdom’s population, are expected to throng the stock market today when shares of Emaar Economic City will be traded for the first time.
Analysts expect a large turnout of shareholders on the first day due to shortage of time and advent of Eid holidays. Authorities have allotted only three and a half hours from 12:30 p.m. to 4 p.m. Many people are expected to sell their shares to purchase Eid requirements.
Meanwhile, analysts also expect huge response for the initial public offering (IPO) of SR1.32 billion of Fawaz Abdulaziz Alhokair & Company, which opens today. The IPO will be open for subscription for 10 days from today to Oct. 16. The minimum number of shares that an individual investor can subscribe is 10 shares and a maximum of 25000 shares.
“The retreat last week was concentrated in small cap stocks, which experienced unjustified rises in the past and had a negative effect on the market’s performance,” the Riyadh-based Bakheet Financial Advisors (BFA) said in their weekly report.
The BFA expected the stock of the Saudi Basic Industries Corporation (SABIC) to benefit from the conglomerate’s takeover last week of a British petrochemical complex with sales capacity of $2.6 billion.
However, SABIC’s shares dropped 3.56 percent last week to SR128.50.
“With third quarter results starting to come out, we expect investors to begin re-evaluating their portfolios in the coming weeks,” the BFA said.
“Meanwhile, the blue chip results will remain the main driver that decides the market’s trend in the next period, while speculative stocks are expected to continue their downward correction due to their weak financial results,” BFA added.
The top gainers last week were Eastern Agriculture, up 29.56 percent to SR177.50, Bishah Agriculture by 14.88 percent to SR222, Jouff Agriculture by 13.17 percent to SR94.50 and Saudi Advanced by 9.23 percent to SR245.50.
Shares of Saudi Fisheries, however, plunged 32.38 percent last week to SR277.25.
Arab stock markets remained lackluster last week due to the Ramadan fasting habits, waves of profit taking and changes of positions that usually coincide with the release of third quarter results, financial analysts said yesterday.
However they expected markets to rebound toward the end of Ramadan with the advent of fresh liquidity to regional bourses, particularly in the oil-rich Gulf area, Jordan and Egypt. “I believe we are going to see a bigger momentum at the end of Ramadan as investors are expected to pump fresh liquidity into regional markets,” Wajdi Makhamreh, deputy CEO of the Osoul Brokerage Co., told Arab News. “For the time being, I think investors will focus on small caps and speculative stocks because they lack patience and prefer a hit-and-escape approach,” he said.
Makhamreh expected traders to ignore blue chips at this juncture pending the publication of all third quarter results.
Jordanian shares continued to be highly volatile last week as traders awaited the publication of balance sheets of listed firms in the third quarter of the year.
The all-share price index of the Amman Stock Exchange (ASE) inched up 0.60 percent this week, closing on Thursday at 6,180 points from 6,084 points last week, according to the market’s weekly report.
In Kuwait, the KSE all-share price index gained 1.9 percent, to close week at 10,285 points, compared with last week’s close at 10,098 points.
The all-share price index of the United Arab Emirates stock exchange of Dubai also gained one percent last week, closing at 437.27 points up from 432.97 points previous week.
Director of the Sharjah Islamic Center for Financial Services Khalid Darwish believed third quarter profits “will sustain the market’s rebound” in the coming weeks.
In Egypt, the market’s all-share price index lost 2.1 percent during last week, to close at 2,193.27 points compared with previous week’s close at 2,239.65 points, according to the market’s weekly report.
