JEDDAH/AMMAN: Saudi shares witnessed a sharp decline last week mainly due to what Saudi analysts considered as lack of clarity as to the exposure of Saudi banks to the Dubai World debt ordeal.
The Tadawul All Share Index (TASI) tumbled 6.32 percent, crashing the 6,000-point psychological barrier and closing at 5,954.13 points.
TASI is currently 24 percent higher than the year’s start. “The negative performance of the Saudi stock market was driven mainly by the banking sector despite assurances that the Saudi banks’ exposure to the Dubai World crisis was minimal,” the Riyadh-based Bakheet Investment Group (BIG) said.
Shares in SABB dropped by 14.56 percent, Riyad Bank by 12.91 percent, Saudi Hollandi Bank by 11.21 percent, Arab National Bank by 11.06 percent, Samba Financial Group by 10.91 percent, Banque Saudi Fransi by 10.47 percent, and Al-Rajhi Bank by 10.03 percent.
Mohammad Emran, member of the Saudi Economics Society, believed the failure of Saudi banks to announce their individual exposure to the Dubai World debt was to blame for the losses incurred by Saudi shares last week.
The BIG expected investors “to restore trust in the market in the coming period and to wipe out most of the losses they suffered last week.”
The newly listed Al-Alamiya for Cooperative Insurance Co. was the top gainer last week as its shares jumped 273 percent to close at SR37.30. Saudi Basic Industries Corp. (SABIC) shares declined by 4.28 percent last week to close at SR78.25. Over SR14.39 billion worth of stocks traded last week.
Arab stock markets are expected to rally this week after Thursday’s rebound at the Dubai stock exchange, following the cancellation of the merger between Emaar Properties and Dubai Holdings, financial analysts said Friday.
Arab stock markets plummeted across the board last week under the impact of the announcement by the Dubai World conglomerate that it was asking creditors to delay repayment of billions of dollars of its debts amounting to $60 billion.
The main losers of the crisis were the United Arab Emirates bourses of Dubai and Abu Dhabi and the Saudi stock exchange.
However, the Dubai stock exchange’s all-share index surged on Thursday, rising by 7 percent after the Emaar Properties said that it was canceling a merger with Dubai Holdings. As a result, the Emaar Properties share climbed 15 percent on Thursday.
“We believe the Dubai rally will give momentum and return confidence to regional markets when they resume trading next week,” an Amman-based portfolio manager said.
“However, I think confusion will continue to dominate markets for some time to come until the whole picture about Dubai World’s debt and the outcome of negotiations with creditors is clarified,” he added.
Despite Thursday’s rebound, the benchmark of the Dubai stock exchange closed week down by 10.4 percent last week at 1,641 points from 1,831 points previous week.
The Abu Dhabi stock exchange also plunged 3 percent last week, closing at 2,497 points from previous week’s close at 2,573 points.
The UAE shares erased all their gains this year due to the Dubai World debt crisis, analysts said.
The Amman Stock Exchange (ASE) was also the scene for violent fluctuations this week due to Dubai debt concerns and the possibility that UAE investments in Jordan may be affected by the crisis fallout.
The ASE all-share index shed 0.12 percent last week, closing at 2,554 points, according to the market’s weekly report.
Kuwait’s KSE all-share index gained 0.9 percent last week, closing at 6,758 points.
Egypt’s AGX30 index, measuring the performance of the market’s 30 most active stocks, plunged 3.6 percent to close week at 6,154 points.
The GulfBase GCC Index dropped 4.18 percent last week to close at 3,611.70 points. However, the value of GCC traded shares increased by 108.24 percent to $2.34 billion and volume surged by 230.87 percent to 4.42 billion of shares.
— With input from
Abdul Jalil Mustafa
