The Saudi Stock Market continued the downward march for the second month consecutively amid sharp volatility.Tadawul All Share Index (TASI) dived 21.2% during one-month to close on Wednesday 19th April 2006 at 13,261.89 points compared to previous month's close at 16,836.87.TASI index lost 3,574.98 points in a month, lifting the year to date loss to about 20.6%. The market continued its sharp corrective retreat before the activation of the recent recommendations of the Custodian of the Two Holy Mosques, including the permission of the non-Saudi residents to invest in the market commencing from Saturday 25th March 2006, Capital Market Authority (CMA) decisions on Monday 27th March 2006 to increase the fluctuation band from 5 to 10 percent, share splitting (reduce nominal share value from SR 50 to SR10), and to allow trading in fraction of the Saudi Riyals starting from Saturday 1st April 2006. The market continued the sharp decline on the back of the investors psychological reaction to the CMA announcement (on 10th April 2006) to halt the investment accounts of two traders due to stock price manipulation (in-particular, speculative stocks).The market is still under pessimistic pressure of investor (worries about further decline) despite high record in oil prices and the solid profits announced by leading listed companies.
Key market trends
The CCFI All Share Index opened at 1,299 on 21st March '06, lower by 2.61%, compared to last period close of 1,299.08, and registered loss on 12 out of 23 trading days, to close at 1,024.01 on 19th April '06, pulling the market down sharply by 21.2 % during the period under review. The highest single day gain of 4.92 % was observed on 28th March '06, while highest single day loss of 8.42% was seen on 15th April '06. The market capitalization at the end of the period stood at SR 1.975 trillion ($ 526.01 billion).
Sector performance
When compared to the last month close (CCFI market indicators), the sectoral performance was negative.The only gainer was the insurance sector that improved by 6.81%. The service sector led the fall back and lost 46.70%, followed by electricity sector that witnessed a net loss of 40.75%. Agricultural, cement, industrial, telecommunication and banking sectors have shown a net monthly loss of 39.04%, 30.12%, 22.99%, 12.54% and 11.09% respectively. On a YTD basis, the only gainer was the insurance sector that witnessed a net gain (YTD) of 15.03%. Highest loss of 57.82% was observed in the agricultural sector. The price to earning (P/E) and price to book value (P/B) ratios were at 30.52 and 7.13 times respectively (19th April. 2006).
Market activity
The market activity of the overall market volume traded and value traded were mixed compared to previous month, whereas overall volume traded increased by 172.40 % (the increase in volume traded was a direct result of the market splitting), while the overall market value traded witnessed a decrease of 25.06%. Three sectors out of eight witnessed positive volume and value traded (insurance, telecommunication and banking sectors), while the remaining five sectors witnessed mixed performance.Agriculture, service, cement, industrial and electricity sectors registered activity increase by 521.6%, 315.2%, 94.7%, 71.5% and 30.3% on volumetraded, while the value traded witnessed decrease of 26.2%, 52.1%, 28.6%, 25.4% and 38.3% respectively.
In terms of proportional contribution of activity, Industrial sector was the most active sector both in terms of volume traded and the turnover. It accounted for 17.7% of total volume traded and 39.6% for the total market turnover.
Performance of top ten
For the month reviewed, top 10 active shares contributed about 51.2% to the total value traded, about 40.5% of the total volume traded and about 63.6% of the total market capitalization.Saudi Telecommunication Company (STC) and SABIC led the market as STC witnessed 83.7 million shares changing hands, amounting to SR 32.96 billion that represent 9.7% of the total market value traded, while SABIC witnessed trades of 45.1 million shares, making SR 32.41 billion that represent 9.5% of the total market value traded.
Gainers and losers
For the month reviewed and when compared to previous month stocks adjusted close prices, 74 stocks lost, 4 gained and only the stock of Banque Saudi Fransi remained unchanged.Aldrees Petroleum & Transport Co. topped the gainer by capping a heavy 50.45%, followed by Bank Al-Jazira (BJAZ) that gained 11.37%. The National Company for Cooperative Insurance (NCCI), Suadi Arabian Refineries Co. (SARCO) witnessed a net weekly gain of 6.81% and 3.42% respectively. The National Shipping Co. of Saudi Arabia led the list of losers and declined by 86.79%, followed by Saudi Telecommunication Company that lost 81.77%. Taibah Investment & Real Estate Co., Saudi Hollandi Bank and Saudi Automotive Services Co. (SASCO) lost by 71.02%, 64.46% and 60.56% respectively. Heavy loss of more than 50% was observed in 19 scrips, while 37 scrips lost more than 25% and less than 50%, other 18 scrips lost by less than 25%.
Oil Market Developments
The international oil market, showed bullish sentiments during the period from 20th March to 20th April, 2006. In NYMEX June, 2006 crude futures contracts bumped up and close at a record high of $ 75.17/bbl on 21st April 2006 and continued to climb amid persistent concerns about possible shortages, particularly through disruption of crude exports from Iran and Nigeria.Approx.455,000 b/d of crude production was shut in Nigeria by Shell following earlier attacks against company facilities. As per IEA forecast of downward demand growth of global oil demand, slightly revised down from 1.49 mb/d to 1.47 mb/d, world oil supply fell 125 kb/d in Mar 2006 to 84.5 mb/d. OPEC, North America and North Sea production outages outstripped higher non OECD production. A weaker first half trims 35 kb/d from 2006 non OPEC supply, but new field start-ups still boost this year's growth to 1.2 mb/d, supplemented by 275 kb/d of OPEC NGLs. March OPEC supply fell by 215 kb/d to 29.7 mb/d on Nigerian outages and lower Iranian and Iraqi exports.Damage to Iraq's northern pipeline still suspended exports to Ceyhan for some time. Cold weather and supply outage lifted the 1Q 'call on OPEC crude and stock change' 700 kb/d above OPEC supply, pointing to a draw in 1Q global balances. The OPEC Basket-11 (including Iraq) benchmark (during the period from 20th Mar.'06 to 20th April 2006) traded higher than the previous period and in daily terms, the Basket stood at $67 /bbl on 20th of April 2006.
Key corporate news during the period
CMA issued a resolution raising the daily allowed share price fluctuation to 10% for all listed companies commencing Saturday Apr. 1, 2006, and transactions of Saudi riyal fractions will also be accepted.
Based on the Cabinet resolution stipulating that the nominal value for the share of the Joint Stock Companies should be SR 10 per share which means splitting each share into five, CMA announced that the splitting will be implemented gradually within a period of four weeks starting Saturday April 1, 2006.
(CMA) announced approval of subscription in 30% of the shares of Arab Paper Manufacturing Company Limited (WARAQ). The subscription starting date is 24-04-2006 up to 03-05-2006 at a nominal value of SR 10 per share.
Saudi Commerce and Economic Review 2006
