Friday, Jan 05, 2007
BEIRUT (Zawya Dow Jones)--More than three-quarters of retail investors in the Saudi bourse are new to share trading and rely largely on word-of-mouth or media in their investment decisions, a new study shows.
Almost 60% of retail investors said their main aim was to achieve quick financial returns from stock investments, which they mainly finance from salaries and bank loans.
The study by the Saudi-based Asbar Center For Studies said 77% of investors in the Saudi Stock Market have no more than three years experience trading in the market, which was established in 1984 but started electronic trading in 2001.
The Saudi bourse, known as Tadawul, is the largest in the region by market capitalization. It experienced strong growth in 2004 and 2005 but a correction phase in 2006 affected both retail and institutional investors.
Besides information provided by friends and relatives (47.9%), investors named the internet and television as primary sources of information on traded companies with 30%, followed by newspapers, 26%, and text messages, 15.3%.
More than 73.9% of the 1,500 sample survey said they follow the Fatwas, or religious rulings, of Muslim clerics when making investment choices concerning the compliance of some companies with the Islamic law, Sharia.
Tadawul closed 2006 with a market capitalization of $325 billion, losing around $328 billion from its peak valuation. This made it the top loser among Arab stock markets that suffered a turbulent year with total losses amounting to $442 billion.
The study said more than 60% of investors blamed large investors for market crashes while 51.8% blamed it on the rush by small investors to collectively sell off their stocks.
More than 47% of investors said their preoccupation with the market has largely affected work and social activities while 41% said it had a limited effect on their performance.
-By Ayat Basma, Zawya Dow Jones; +961-1-985 757; ayatb@zawya.com
Copyright (c) 2006 ABQ Zawya Ltd.
(END) Dow Jones Newswires
05-01-07 1257GMT
