JEDDAH, 24 March 2008 — The badly-hit insurance and services sectors pulled Saudi stocks down yesterday. The insurance and services indexes were down by 2.25 percent and 1.13 percent respectively.
The Tadawul All-Share Index (TASI) also continued its downward movement yesterday. The index was down by 35.88 points to 9,386.
The shares of newly listed Mobile Telecommunications Company Saudi Arabia (Zain) plunged 4.76 percent to SR20 yesterday. The SR10 Zain shares surged to SR21 on debut on Saturday.
According to Professor Mohamed Ramady, King Fahd University of Petroleum and Minerals, Dhahran, the sharp rally in Zain’s opening price and then quick profit-taking is a reflection of the acute speculative mindset of the Saudi investors. They will continue to drag prices down, with the smaller investors selling out over the next few days, and, in the process also drag down STC (Saudi Telecom Co.) and Mobily (Etihad Etisalat) shares as happened on the first day of Zain trading on Saturday. Some semblance of price stability will emerge once core group of strategic investors control Zain shares. However STC and Mobily already have an established market share as well as a more mature delivery infrastructure, and it is Zain that will have to work harder to capture market share from the existing providers.”
In the long run, according to Ramady, consumers will benefit even more in terms of more competitive offers from the telecom companies.
Etihad Etisalat shares, however, increased by 2.25 percent to SR56.75, while STC shares remained unchanged at SR65.50 yesterday.
In the banking sector, shares in The Saudi Investment Bank, Saudi Hollandi bank and Banque Saudi Fransi edged higher yesterday. SABB shares fell by 2.93 percent and Riyad Bank by 2.08 percent.
Jarir Marketing Company (Jarir) shares increased 0.97 percent to SR155.50 yesterday. The Riyadh-based Jadwa Investment said in its report that current share price of Jarir is undervalued.
Jarir is a retailer and wholesaler of IT products, books and office and school supplies. It is the market leader in its field in Saudi Arabia and has established a presence in the GCC.
Jarir’s share price was around 30 percent below Jadwa’s estimation of fair value on the valuation date (March 18).
The Tadawul announced that Rabigh Refining and Petrochemical Company (Petro Rabigh) has been added into the TASI at yesterday’s closing price of the shares. Petro Rabigh shares closed 0.99 percent lower at SR50 yesterday.
Alujain Corp. was the top gainer as its shares increased by 4.79 percent to SR43.75. Anaam International Holding Group Co. topped the list of losers as its shares dropped 9.85 percent to SR64 yesterday.
In the insurance sector, shares in Saudi Arabian Cooperative Insurance Company (SAICO) declined by 7.37 percent to SR72.25 as most of other shares were in the red yesterday.
The stock market turnover dropped sharply to SR5.99 billion yesterday compared to SR12.52 billion on Saturday.
BMG Index Turnover Declines
The BMG Saudi Index continued to drop in its second trading session this week. The index closed at 512.6 points, down by 0.3 percent from Saturday’s close. The market turnover also declined by 18.6 percent to SR1.4 billion ($361 million), compared to SR1.6 billion ($444 million) on Saturday.
The banking, electricity and telecommunications sectors experienced no change in their number of points yesterday.
Savola Group was the only upward mover, appreciating by 1.1 percent to SR46.75, whilst 20 shares depreciated. The big heavyweights in the market had marginal moves, with Al-Rajhi Bank shares standing still, whereas the price of Saudi Basic Industries Corp. (SABIC) depreciated by 0.29 percent to SR174.25 per share.
