• Home
• News Article

CMA Decision Weighs Heavily on Saudi Stocks

Jeddah/Amman: The Saudi stock market continued to drop further last week. The Tadawul All-Share Index (TASI) shed another 3.16 percent last week, falling below the 7,000-point psychological barrier and closing week at 6,987.86 points from 7,215.63 points previous week.

TASI is currently 11.92 percent lower than at the year's start.

The Riyadh-based Bakheet Financial Advisors (BFA) said in their weekly report that the market had come under pressure from a decision by the Capital Market Authority ( CMA ) to suspend trading of Anaam International Holding Group Co. shares as of Jan. 20.

The CMA said the firm had accumulated losses amounting to 95 percent of its capital.

Earlier, the CMA suspended trading of stocks of another firm, Bishah Agriculture Development Co., for the same reason.

"These announcements reflected on the rest of the distressed companies which are suffering from accumulated losses," the BFA said.

They expected investors to "change course toward profitable companies" after losses they incurred as a result of speculative trading.

The stock market turnover also dropped last week to SR41.39 billion from SR43.38 billion in the previous week.

Shares of Advanced Polypropylene Co. (APPC) , which made a strong debut on the Tadawul on Jan. 20, continued to surge. APPC was the top gainer last week as its shares jumped 52.50 percent to SR15.25. APPC shares soared 77.50 percent on debut. Over SR3.43 billion worth of APPC shares changed hands last week.

Saudi Advanced shares plunged 45.77 percent last week to close at SR38.50.

Saudi Basic Industries Corp. (SABIC) shares gained 4.23 percent last week.

Arab stock markets are expected to remain under the impact of investors' evaluations of annual results and political developments for the coming few weeks, analysts said yesterday.

Regional bourses reflected different performances last week, with the Saudi stock exchange recording a fresh dive, while Jordanian and United Arab Emirates shares showing a recovery.

"We believe regional bourses will remain under the impact of investors' assessment of respective annual balance sheets for the coming weeks," Hani Konqar, an analyst at AB Invest , the Arab Bank's investment arm, told Arab News.

Other Amman-based portfolio managers cited geopolitical developments such as the showdown with Iran over its nuclear file as key factors affecting trading at Gulf bourses particularly the Saudi and Kuwaiti stock exchanges.

Jordanian shares continued their robust performance for the second week in a row, buoyed by the heavyweight Arab Bank and the rest of the banking sector, Konqar said.

The all-share price index of the Amman Stock Exchange gained 5.1 percent last week, closing at 6,129 points, up from 5,832 points last week, according to the ASE weekly report.

"We think investors have been encouraged by 2006 results of listed firms, particularly the banking sector, to build new positions," Konqar said. He also reported a comeback by Gulf investors to the ASE to buy Jordanian shares "making benefit from their low prices". Kuwaiti stocks retreated last week, ignoring the good performance achieved by listed firms in 2006. The KSE all-share price index declined 1 percent last week to close at 9,704 points compared with previous week's close at 9,796 points.

"The Kuwaiti market has apparently come under the impact of political tensions in the region, particularly those relating to the crisis between Iran and the United States" over Tehran's nuclear capabilities, analysts said.

The UAE all-share price index of the Dubai and Abu Dhabi stock exchanges gained 3 percent last week, closing at 4,128 points from 4,007 points previous week

By Khalil Hanware & Abdul Jalil Mustafa

© Arab News 2007