JEDDAH/AMMAN: The Saudi stock market suffered its deepest fall last week as uncertainty, speculation and lack of transparency were cited by analysts as the main reasons for the plunge.
The Tadawul All-Share Index (TASI) plummeted further 9.35 percent last week, closing at 4,424.23 points, led by the petrochemical and banking sectors.
The Bakheet Investment Group (BIG) said in its weekly report that TASI witnessed on Saturday and Sunday a sharp drop of 10 percent and 4 percent respectively as a result of massive selling and margin calls following the volatile moves by the global markets on the end of the previous week. As a result, TASI reached a five-year low of 4,200 points.
The market reacted positively initially to the Saudi Arabian Monetary Agency (SAMA) decision last week to reduce the repo rate from 4 percent to 3 percent, and the cash reserve requirement on demand deposits from 10 percent to 7 percent.
“Although most of the stocks are still trading on very attractive prices, reflecting very tempting P/E ratios and as a result investors should make the best of the current markets condition by taking advantages of the very attractive stock prices and build a long term investment strategy. Nevertheless, investors are still puzzled by the oil price level, waiting anxiously for the market to settle down before hunting the potential opportunities,” the BIG report said.
The Riyadh-based Kasb Financial Group issued a report yesterday accusing “the powers of speculation” of playing havoc with markets by “spreading rumors to mislead small investors and direct their trading moves.”
The report also charged that the speculation groups were “destabilizing the market by blocking the government’s plans to restore confidence in the market.”
The value of traded shares was SR27 billion last week.
The top gainer last week was Malath Cooperative Insurance and Reinsurance Co. as its shares jumped 13.44 percent to SR43.90. Shares in Saudi Chemical Co. plunged 25.82 percent to SR16.95. National Industrialization Co. shares dived 21.79 percent to SR10.95 and Saudi Basic Industries Corp. (SABIC) shares dropped over 9 percent last week to close at SR45.
Arab stock markets were mixed last week as investors continued to come under the negative psychological pressures of declining oil prices and spillovers of the global deflation, financial analysts said yesterday.
“I believe regional markets will remain volatile as investors come under the impact of falling oil prices and the fallout from global bourses,” an Amman-based portfolio manager said.
“I think speculation and liquidity obsession will continue to dominate Middle East equity markets for several weeks to come as long as the ghost of recession grips world markets,” he said.
Well aware of the negative impact of falling oil prices on regional markets and economies, OPEC (Organization of the Petroleum Exporting Countries) officials are scheduled to meet in Cairo today with a new output cut is on the agenda, analysts said.
Jordanian shares also extended losses last week under selling pressures in response to bleeding on other Arab and global markets, analysts said. The All-Share Price Index of the Amman Stock Exchange shed 4.12 percent last week, closing below the psychological barrier of 2700 points at 2,657 points, according to the ASE weekly report.
Kuwaiti stocks showed relative stability last week, apparently buoyed by reports that the state-owned Kuwait Investment Corporation (KIC) planned to enter the market. Finance Minister Mustafa Shamali expected the KIC to start trading before Eid Al-Adha, which is tentatively set on Dec. 8.
Egypt’s CASE-30 index, measuring the performance of the market’s 30 most active stocks, closed week up 4.3 per cent at 4,044 points on recovery by other Arab and world bourses, analysts said.
The GulfBase GCC Index dropped 4.25 percent to 3,369.76 last week. The value of GCC traded shares, however, increased 5.46 percent to $10.45 billion but volume of traded shares declined 7.58 percent to 4.84 billion last week.
— With input from Abdul Jalil Mustafa
