| 24 Aug 2008 |
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Saudi stocks jump 5.18% on CMA announcement
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JEDDAH: The Saudi stock market reacted positively yesterday to the announcement of the Capital Market Authority (CMA) on Wednesday that it will allow non-resident foreign investors access to the stock market through swap agreements with authorized investors, who would legally own the underlying shares.
The Tadawul All-Share Index (TASI) jumped by 5.18 percent or 438.19 points to 8,901.90, its biggest one-day gain since April 2007. Despite yesterday's big gain, the index is still down 19.36 percent so far this year.
Out of 124 shares traded, 117 companies were in positive territory, while only three were down. The losers yesterday were National Agriculture Marketing Co., Allied Cooperative Insurance Group and SABB TakafulSABB Takaful
.
The top gainers yesterday were Tawuniya (The National Company for Cooperative Insurance), Etihad Etisalat, Arabian Pipes Co. Samba Financial Group and Banque Saudi Fransi.
Al-Rajhi Bank shares surged 7.97 percent to SR88 yesterday. In the petrochemical sector, shares in Saudi Basic Industries Corp. (SABIC) increased by 6.40 percent to close at SR133. Almarai Company shares edged higher by 2.85 percent to SR180.25 as it announced yesterday that it had signed a non binding memorandum of understanding on Tuesday regarding the acquisition of 75 percent of Taiba Investment and Advanced Food CoTaiba Investment and Advanced Food Co
. in Jordan. Over SR8.76 billion worth of shares changed hands yesterday.
Meanwhile, according to Trowers & Hamlins, an international and City law firm, the value of rights issues by Gulf-based companies jumped by 242 percent to a record $15.76 billion this year. In the last six months alone rights issues in the Gulf Cooperation Council (GCC) raised $11.9 billion from shareholders.
This year's record figure is a rapid recovery from the $4.6 billion raised through rights issues in the previous year when a fall in the region's stock markets undermined plans for wider capital raising through secondary share issues.
The increased equity issuance comes on top of record bond issuance by Gulf-based companies in the last year of $17 billion of corporate sukuk (Islamic bonds) and $11.2 billion of conventional corporate bonds.
Andrew Rae, partner, of Trowers & Hamlins, said in a statement: "The Gulf stock markets and the companies listed on them are maturing rapidly. The oil led boom has provided a tremendous boost to the profitability of Gulf companies and their strategies for expansion."
Forty-seven percent of all Gulf rights issues over the last year were issued by banks and financial services companies.
Although a small portion of that money has been used to repair limited damage created by the collapse in market values of US subprime investments the majority is being used by banks to take advantage of new lending opportunities within the growing Gulf economy.
BMG turnover soars
The BMG Saudi Index surged by 5.2 percent 482.8 points yesterday. The total turnover increased by more than two folds to reach SR4 billion ($1.1 billion), up by 145.6 percent.
All sectors experienced gains in yesterday's session topped by the banking sector which improved by 7.5 percent.
The industrial sector followed with a 4.9 percent increase.
The services and telecommunications sectors came in next with 3.9 percent up, leaving the last place for the insurance sector which advanced by 0.9 percent. Twenty-nine shares went up and only one went down.
By Khalil Hanware
© Arab News 2008
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