Saudi stocks to gain momentum on Q2 results
Stocks up, but some fluctuation thanks to "profit taking moves."
June 5, 2010 9:57 by Samuel Potter
Saudi shares surged at the start of the week but fluctuated during the rest of the week for what analysts described as profit-taking moves.
The rebound was led by the petrochemical sector apparently after oil prices picked up following their decline to $65 per barrel last week.
Measured on weekly basis, the Tadawul All-Share Index (TASI) gained 2.37 percent, closing the week at 6,001.38 points.
On a week-to-week basis, sector trading saw gains in almost all sectors. The only sector that closed with a loss was the Insurance sector, which was down 2.18 percent. Otherwise, sector gains ranged from 0.44 percent in the Real Estate Development sector on the lower part of the scale, to gains of 4.44 percent and 5.71 percent in the Petrochemical Industries and Retail sectors respectively, the Financial Transaction House (FTH) said in its weekly market commentary.
The top gaining companies for the week were Al-Othaim and Halwani Brothers, which were up 15.41 percent and 12.90 percent respectively. On the other hand, the five top declining companies for the week were all in the Insurance sector, with the biggest losses seen in AICC (Arabia Insurance Cooperative Company) and GUCIC (Gulf Union Cooperative Insurance Company), which were down 12.73 percent and 12.67 percent respectively, the FTH report said.
The value of Saudi traded shares fell to SR19.94 billion last week compared to SR23.32 billion in the previous week.
Saudi analyst Yassin Al-Jafri expected Saudi stocks to gather momentum amid predictions that the second quarter results could be better than those of the first quarter.
“Barring any sharp decline in oil prices, I think Saudi stocks will rally anew in the medium term due to the positive macroeconomic fundamentals and the low return of investments in alternative spheres,” he said.
At the end of May, the Tadawul index closed at 6,120.52 points, lost 747.45 points or 10.88 percent over the close of the previous month. On an YTD basis TASI lost 1.24 points, according to Tadawul’s monthly statistical report released last week.
Highest close level for the index during the month was 6,916.79 points as on May 1.
Total equity market capitalization at the end of May reached SR1.20 trillion, decreasing by 11.45 percent over the previous month.
The report said total value of shares traded in May increased by 14.88 percent to SR100.50 billion.
The total number of shares traded jumped by 23.84 percent to 4.30 billion in May compared to 3.48 billion shares traded in April.
The total number of transactions executed during May reached 2.24 million compared to 1.71 million trades for the month of April, increasing by 31.22 percent.
Arab stock markets closed last week mixed as investors continued to come under psychological pressure from global market woes and unstable oil prices, financial analysts said Friday.
They expected regional markets to retain linkage with world bourses in the coming weeks, while investors keep a close eye on second quarter earnings.
The Saudi and Egyptian stock exchanges rebounded last week while the rest of Arab bourses lost ground amid reports of retreating confidence and shortage of liquidity.
“I believe the psychological linkage between regional and global markets will continue in the coming weeks until effective measures are taken to come to grips with the euro zone credit crisis,” Wajdi Makhamreh, CEO of the Noor Investment brokerage, said.
“Oil prices will also have to be reckoned with as one of the major factors that decide the trend of Middle East markets,” he said.
Makhamreh expected most investors to adopt wait-and-see approaches as speculation dominated markets due to ambiguity surrounding steps to handle the European debt ordeal.
Jordanian shares deepened losses last week amidst panic sell-off due to dwindling confidence and shrinking liquidity, Makhamreh said.
The all-share index of the Amman Stock Exchange shed 1.2 percent last week, to close at 2,393 points after hitting a six-year low.
Kuwait’s KSE all-share index fell 1.1 percent last week, closing at 6,733 points.
The benchmarks of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi shed 4 percent and 2.7 percent to close week respectively at 1,542 points and 2,571 points.
Egypt’s AGX30 index, measuring the performance of the market’s 30 most active stocks, gained 2.8 percent last week, to close at 6,518 points, finding support from active foreign buying, analysts said.
The GulfBase GCC Index rose slightly to 3,600 points last week. The value of GCC traded shares, however, fell by 17.32 percent to $6.49 billion and volume declined by 17.68 percent to 2.72 billion of shares.