JEDDAH, 8 September 2007 — The Saudi stock market suffered heavy losses last week after surging 1.70 percent in the previous week. The Tadawul All-Share Index (TASI) dropped below 8,000 points. The index fell 4.54 percent or 373.31 points to 7,853.66 points last week compared to previous week’s closing at 8,226.97 points.
The newly listed Saudi Arabian Cooperative Insurance Company was top gainer last week as its shares jumped 1,225 percent to SR132.50.
Shares in the United International Transportation Company Ltd., which started trading on the Saudi stock market last week, soared 161.54 percent to close at SR136.
In the banking sector, shares in Riyad Bank also surged 3.28 percent to SR63, but shares of other banks suffered badly last week. While the shares of the Saudi Hollandi Bank plunged by 12.45 percent to SR51, Bank Albilad shares dropped by 7.97 percent to SR31.75, the Saudi Investment Bank by 6.90 percent to SR40.50, Al-Rajhi Bank by 5.83 percent to SR84.75, Bank AlJazira by 5.79 percent to SR57 and Banque Saudi Fransi by 5.41 percent to SR70.
In the insurance sector, shares of the Saudi Indian Company for Cooperative Insurance declined by 24.96 percent to SR120.25, while the shares of SABB Takaful declined by 23.77 percent to SR170, the Saudi Fransi Cooperative Insurance Company by 21.69 percent to SR148, the Alahli Takaful Company by 21.34 percent to SR193.50 and the Mediterranean & Gulf Insurance & Reinsurance Co. (MedGulf) by 19.29 percent to SR56.50.
The telecom sector was also in the red. Shares of Saudi Telecom Co. (STC) dropped by 6.62 percent to SR67 and Etihad Etisalat by 6.76 percent to SR65.50 last week.
The stock market turnover also fell last week to SR47.59 billion as compared to SR56.84 billion in the previous week.
The Saudi stock market surged in July and August but in September it started a downward trend.
According to the Riyadh-based Jadwa Investment’s September Monthly Bulletin, which was released last week, the rally in the Saudi stock market through July and August marks a welcome return to normality — a market with low volatility, moving roughly in line with earnings growth expectations. There remains speculative excess in many small companies, the latest being the new insurance companies, but overall the market’s sharp and volatile decline is behind us, and the market has become an investor’s market, where there are excellent opportunities to invest in quality companies at reasonable prices.
The summer rally took the TASI from 6,969 on June 30 to 8,227 on Aug. 29, an 18 percent rise.
“It was unlikely that the market could keep up this rate of growth, so the falls in early September have not come as a surprise. Nonetheless, the nature of the rally is impressive as it occurred with low volatility and was supported by identifiable changes in the fundamentals,” Brad Bourland, chief economist and head of research at Jadwa Investment, said in the report.
The report said second-quarter earnings of listed companies were generally strong. Banks in particular performed better than in the first quarter, when their results had rattled the market.
Oil prices also reached an all-time high of $79 per barrel on Aug. 1 and the banking sector rallied strongly in late August after the Council of Ministers announced that shares in financial service companies would be opened to Gulf Cooperation Council (GCC) investors.
Meanwhile, the Ministry of Commerce and Industry and Jabal Omar Development Company have reached a preliminary agreement toward settling their conflict. The move will certainly please about five million subscribers who have purchased the company’s shares pumping nearly SR2 billion in investment.
The legal committee proposed that the ministry count the votes of 150 new shareholders whose names are not appeared in the list of founders but have purchased land from the company. The ministry agreed to accept them on condition that they register their deals with the notary public. Walid Al-Ruwaished, acting director of companies, said the ministry had not taken any official measure to end the conflict. However, he pointed out that the ministry was seeking an end to the conflict.
An official source at the company said he expected the ministry to sign the documents of agreement today. The company will then call for a general assembly meeting. The last meeting was canceled by the ministry citing it lacked the necessary quorum.
The GulfBase GCC Index also declined 1.64 percent to 5,515.46 points. The value of GCC traded shares fell 7.51 percent to $19.23 billion but volume surged 18.91 percent to 7.10 billion shares.
