JEDDAH/AMMAN, 28 April 2007 — Saudi shares came under pressure for the second week in a row as speculators started to shed their holdings of small-cap stocks in the light of their poor first quarter results.
The Tadawul All-Share Index (TASI) plummeted a further 2.85 percent last week, closing at 7,273.34 points from 7,486.85 points previous week.
TASI is currently 8.3 percent lower than the year’s start.
According to the weekly report of the Riyadh-based Bakheet Financial Advisors (BFA), the plunge of the small caps put “psychological pressure on blue chips, which usually represent the market’s driving force.”
The BFA expected the Saudi stock market to be “rather quiet this week, with investors awaiting the operation of the new trading system, which is expected to bring about a higher level of monitoring and transparency on trading”.
The new trading system also “minimizes the chances of trading fraud involved in speculation on small-cap stocks and consequently leads to less volatility in future market trends,” the BFA said.
Al-Baha Investment & Development Co. was the top gainer last week as its shares rose by 11.94 percent to SR37.50. Shares of Red Sea Housing gained 7.95 percent to SR71.25, Jazan Development by 7.77 percent to SR27.75 and Easter Cement by 5.54 percent to SR71.50.
Shares of Saudi Hollandi Bank fell 17.77 percent to SR40.50, Saudi Industrial Export Co. by 12.32 percent to SR44.50, National Agriculture Development Co. by 11.21 percent to SR51.50 and Alujain Corporation by 10.89 percent to 22.50.
The stock market turnover also dropped to SR43.00 billion last week compared to SR47.34 billion in the previous week.
Tourism Enterprise Co. was most active by value last week as over SR2.61 billion worth of shares changed hands followed by Saudi Fisheries and Hail Agriculture.
Saudi Basic Industries Corp.’s (SABIC’s) shares declined by 3.08 percent last week to SR118.00.
Saudi Public Transport Co. (SAPTCO) shares gained 4.84 percent to SR16.25 last week as the general shareholders’ meeting approved a 7 percent cash dividend payment for 2006 and a capital hike to SR1.25 billion from SR1 billion to be carried out through a one-for-one bonus issue.
In the telecom sectors, shares of Saudi Telecom Co. (STC) and Etihad Etisalat edged lower by 1.23 percent and 1.90 percent respectively.
Arab stock markets plunged into a new bearish phase over the past couple of weeks as investors rode the wave of speculation again and shunned long-term holding of stocks, financial analysts said yesterday.
They expected regional bourses to remain lackluster during May, with investors looking out for new moving factors, particularly after dividend distributions for 2006 were drawing to a close.
“We believe a large number of speculators are stepping in, heralding a new phase where investors prefer to hold stocks for short periods of times and avert long-term trading strategies,” Amman-based analyst Wajdi Makhamreh told Arab News.
“We think caution will dominate Arab stock markets for the coming months amid concerns over the Iranian-West nuclear standoff sliding into a confrontation,” he said.
Jordanian stocks remained subdued last week by lack of liquidity and the ramifications of a complicated credit case, whereby a local manager of a London-based firm obtained facilities from four Jordanian banks without adequate collateral, Makhamreh said.
The all-share price index of the Amman Stock Exchange shed 0.41 percent last week, closing at 5,970 points, down from previous week’s close at 5,994 points, according to the ASE weekly report.
Kuwait’s KSE all-share price index gained 1.15 percent, to close last week at 10,710 points up from 10,589 points previous week.
The Kuwaiti benchmark price is currently 6.39 percent higher than the year’s start.
The United Arab Emirates stocks lost further ground last week in what analysts described as “profit-taking” moves.
The UAE unified all-share price index of the Dubai and Abu Dhabi stock exchanges fell 1.3 percent, closing last week at 3,958 points from 4,007 points last week.
The GulfBase GCC Index fell 1.07 percent last week to 4,854.02 points. The value of GCC traded shares also declined 23.04 percent to $17.55 billion and volume dropped by 1.16 percent to 5.41 billion last week.
