JEDDAH/AMMAN, 3 May 2008 — The Saudi stock exchange kept up its upward trend last week amid a noticeable rise in trading volumes that reflected growing investor confidence.
The Tadawul All-Share Index (TASI) gained 3.2 percent, surpassing the psychological barrier of 10,000 points and closing at 10,066.16 points, compared with previous week’s close at 9,754.10 points.
TASI is currently 8.8 percent lower than the year’s start.
The weekly report of the Riyadh-based Bakheet Investment Group (BIG) expected the “positive environment surrounding the Saudi market,” as represented by the first quarter results and soaring oil prices, to push prices up in the coming weeks.
The stock market turnover, however, dropped to SR51.90 billion last week as compared to SR59.66 billion in the previous week.
Samba Financial Group was the top gainer last week as its shares jumped 18.10 percent to SR99.50, while SABB suffered a setback as its shares dropped 31.76 percent to SR112.25.
Mobile Telecommunications Company Saudi Arabia (Zain) was most active by value as shares worth SR7.57 billion changed hands last week.
Arab stock markets extended gains last week, buoyed by first quarter results and surging oil prices, and financial analysts said yesterday they were “cautiously optimistic” over the performance of regional bourses in the coming weeks.
“We are cautiously optimistic over the behavior of regional bourses in the coming weeks, because speculation continues to be a key driving force for markets,” Wajdi Makhamreh, deputy CEO of the Amman-based Sanabel International Brokerage told Arab News.
“Stock markets continue to act as haven for investors who conduct trading on the basis of fundamentals and not for speculation purposes, given the huge amounts of liquidity seeking investment outlets,” he said.
Jordanian shares were steady last week, propelled by blue chip firms, foremost the heavyweight Arab Bank, which posted a 24-percent increase in its quarterly profits.
The Amman Stock Exchange (ASE) also drew support from the Arab Potash Co., the Jordan Phosphates Mines Co. and the Jordan Petroleum Refinery, Makhamreh said.
The ASE all-share price index edged lower, closing week at 8,712 points from 8,739 points last week, according to the market’s weekly report.
Kuwait’s KSE all-share price index gained 1.0 percent, closing at 14,755 points from 14,600 points last week.
The benchmark of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi closed up 1.0 percent at 6,262 points compared with last week’s close at 6,210 points.
Al-Mojil Group IPO
The landmark initial public offering (IPO) of Mohammad Al-Mojil Group (MMG), Saudi Arabia’s premier industrial construction and construction services company, opens for subscription today, and will close on May 12, according to a press release received in Jeddah yesterday.
HSBC Saudi Arabia Ltd., the financial adviser and lead manager for the IPO, announced in early last month that the share price has been set at SR70 per share.
Osama As’ad, director of investment banking at HSBC, said, “MMG has a 50-year track record of success, which was taken into consideration by HSBC and institutional investors involved in the book-building process in arriving at the pricing for this landmark offering. The company has demonstrated superior financial performance, averaging 95 percent annual net profit growth, derived from its core business.”
Regarding the share price, As’ad said, “International best practice standards were employed to arrive at the share price for this offering. The offering price of SR70 represents a price-to-earnings (P/E) ratio of 11 when compared to MMG’s 2007 earnings per share (EPS) of SR6.35. This is lower than the P/E ratio of the building & construction sector on the Saudi Stock Exchange, which has an average P/E ratio of 25, while the Tadawul has an average P/E ratio of 20.”
BMG Index Turnover Falls to SR17.2bn
The BMG Saudi Index gained 4.93 points last week, rising by 0.9 percent to 544.95 points. The market turnover, however, fell by 25.7 percent to SR17.2 billion ($4.6 billion), compared to SR23.0 billion ($6.2 billion) registered in the previous week. A total of 450.1 million shares were traded last week, compared to 643.2 million shares in the previous week, declining by 29.9 percent. The average price-earnings (P/E) ratio for last year’s earnings was 25.81 times, whereas the price-to-book (P/B) ratio was 4.18 times.
Four sectors were able to gain more ground during the week; with the banking, insurance, agriculture, and telecommunications sectors advancing by 6.5 percent, 4.2 percent, 2.8 percent, and 2.3 percent, respectively.
The beta coefficient was 1.03 for both the industrial and banking sectors, 1.00 for the services sector and 0.92, 0.67, 0.64, and 0.29, for the agricultural, electricity, telecommunications, and insurance sectors, respectively. Thirteen stocks appreciated week-on-week, whilst seven shares depreciated.
