JEDDAH, 8 April 2007 — The Saudi stock market rebounded sharply yesterday after falling 2.83 percent last week. The Tadawul All-Share Index (TASI) surged 395.35 points or 5.16 percent to close at 8,061.97, its biggest one-day gain in nearly five months.
The index is 1.62 percent higher than at the start of the year. Stocks of all the 86 listed firms rose yesterday. Over SR16 billion worth of shares changed hands.
The Industrial Index jumped more than 6 percent or 1,073.40 points to reach 18,569.51. The services and agriculture stocks also posted hefty gains. The Services Index gained over 9 percent, the Electricity Index 8 percent and the Agriculture Index 7.7 percent.
In the banking sector, shares of Bank AlJazira, Bank Albilad and Al-Rajhi Bank rose sharply. Shares of the bellwether Saudi Basic Industries Corp. (SABIC) also jumped 5.41 percent to SR121.75.
In the telecom sector, shares of Saudi Telecom Co. (STC) and Etihad Etisalat edged higher by 3.89 percent and 1.29 percent respectively.
According to Mohamed Ramady, visiting associate professor at King Fahd University of Petroleum and Minerals, Dhahran, the public should not be overly enthusiastic about this sharp one-day rise as investor confidence could suddenly reverse.
Ramady said: “In order for the markets to gain any semblance of stability, and for gains or losses to be based on corporate performance of listed stocks, maybe the time has come to introduce new capital market instruments such as futures and an options market to smooth out trades. This is a chance for brokers and other financial advisory companies now being approved by the Capital Market Authority. A longer term possibility is Gulf cross listing, but this will take time. Until then investor training and professional market advice is the only long term hope for this unsettled market.”
What is more disturbing, according to Ramady, is that no one seems to be concerned when the market is gaining a hundred points or so in one day without any basis.
Abdul Rahman Al-Tuwaijri, secretary-general of the Supreme Economic Council and chairman of the Capital Market Authority, said the new stock exchange system would come into effect next month. It would strengthen the market’s effectiveness.
“It will remove many negative aspects and meet most requirements,” he added.
After plunging 52.53 percent in 2006, the TASI fell 55.06 percent at the end of the first quarter this year to 7,666.11 points, compared to 17,060.34 points for the same period last year.
