Arab Stock Markets Rally After Record Plunge Last Week
Arab News - 18/03/2006
Arab stock markets rebounded over the past couple of days after an historical plunge that prompted intervention by respective governments.
However, analysts said yesterday they expected regional markets to remain wary of any significant advance in the short run, though blue-chip stocks stood to gain in the medium term, particularly early in April when first quarter results are due to come out.
Saudi Arabia will soon allow foreign residents to invest directly in the country's stock market as Custodian of the Two Holy Mosques King Abdullah on Wednesday instructed authorities to study measures for implementation soon.
Remarks by Chairman of the Kingdom Holding Company (KHC) Prince Alwaleed that he also intended to invest up to SR10 billion in Saudi stocks gave a boost to the Saudi stock exchange.
The Tadawul All-Share Index (TASI) plummeted 8.75 percent last week, closing on Thursday at 16,355.79 points, down from 17,924.70 points last week.
Saudi analyst Yousuf Qustantini predicted the rally would continue in the short term propelled by demand on blue-chip shares, but said its continuation in the long term would depend on "the availability of adequate liquidity" in the market.He advised small investors with little trading experience to stay on the sidelines in the forthcoming period and assign their decisions to investment funds.
The market turnover also dropped to SR60.84 billion last week compared to SR112 billion in the previous week.
The top losers for the week were Arab National Bank, Food Products Co., Eastern Agriculture, Filling & Packing Materials Manufacturing Co. and Qassim Agriculture.
Saudi Basic Industries Corp. (SABIC) shares fell 10.09 percent in a week to SR1,452 and Saudi Electricity Co. (SEC) shares by 10 percent to SR162.
In the telecom sector, shares of Saudi Telecom Co. (STC) dropped 9.30 percent in a week to SR926 and Etihad Etisalat by 8.03 percent to SR630.
"I believe regional stocks are in a consolidation phase after prices went down to levels where they appeared to provide a buy opportunity," Wajdi Makhamrreh, investment manager and head of brokerage at the Jordan Finance & Investment Bank, told Arab News.
"However, we do not rule out further downward corrections in the short term, but I believe first quarter results will give support to markets in the medium term," he said.
A substantial slippage at the Saudi stock exchange at the beginning of the week seemed to affect other Arab bourses particularly in Egypt, Jordan and Kuwait, which followed suit. The all-share price index of the Amman Stock Exchange shed 3.4 percent last week, closing on Thursday at 7,326 points, compared with previous week's close at 7,584 points, according to the ASE weekly report. "Most Jordanian stocks have ended up at logical levels and the market is passing through a consolidation phase," Bashar Amad, vice chairman of Amwal Invest Co. brokerage said. "Some investors have apparently come under psychological pressure as a result of slippage at other Arab stock markets," he added.
Kuwaiti stocks also plummeted last week and small investors reportedly staged a sit-in urging an intervention by the government.
