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MENAFN - Arab News - 22/03/2008

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(MENAFN - Arab News) The Saudi stock market extended losses for the fourth week in a row last week, with investors coming under mounting pressures from world markets and reports of imminent US stagnation.

The Tadawul All-Share Index (TASI) shed 4.07 percent last week, closing at 9,488.85 points from 9,891.80 points previous week. TASI is currently 15.1 percent lower than the year's start.

The weekly report of the Riyadh-based Bakheet Investment Group (BIG) described the decline at the Saudi stock exchange as "unjustified" and expected the market to get into a "steady mood" until the release of the first quarter results, which it expected to "boost the investors' confidence."

"The Saudi stock market is still on positive outlook, given the attractive prices of many listed firms, particularly petrochemical and banking stocks," the BIG said.

The stock market turnover also fell to SR29.64 billion last week compared to SR33 billion in the previous week.

Shares of petrochemical companies made hefty gains last week. Yanbu National Petroleum Co. (YANSAB) shares jumped 8.53 percent to SR57.25, Sahara Petrochemical by 7.65 percent to SR45.75, Saudi International Petroleum Co. by 3.45 percent to SR37.50 and Rabigh Refining and Petrochemical Co. by 2.04 percent to SR50.

In the insurance sector, shares in Saudi IAIC Cooperative Insurance Co. increased by 8.11 percent to SR160 last week. However, shares in The Mediterranean & Gulf Insurance & Reinsurance Co. and Trade Union Cooperative Insurance Co. dropped 10.88 percent and 10.32 percent respectively.

Dr. Fahd Al-Anazi, a member of the National Insurance Committee, has emphasized the need for licensing powerful re-insurance companies within the Kingdom to avoid flight of funds to international insurance giants. He also called for the merger of insurance firms in order to face foreign competition and offer better services to their clients.

Last week, the Capital Market Authority (CMA) approved the request by the Saudi British Bank (SABB) for increase of it's capital from SR3.75 million to SR6,000 million by issuing of three bonus shares for every five shares owned by the shareholders.

The CMA also approved Al-Abdullatif Industrial Investment Company's request to increase it's capital from SR650,000,000 to SR812,500,000 by issuing of one bonus share for every four shares owned by the shareholders.

The extraordinary general assembly of Aldrees Petroleum & Transport Services Co. approved last Monday the capital increase through stock bonus.

Arab stock markets lost ground last week in response to plunges on world markets and US economic slowdown concerns, but financial analysts said yesterday they expected regional stocks to benefit from the US Fed's latest interest rate cut.

"Middle East markets have come again under psychological impact from international bourses which plunged this week in response to US recession fears," Nizar Taher, head of brokerage at the Jordan Ahli Bank, told Arab News.

"Therefore, I think Arab stock markets will rebound, drawing benefit from the Fed's cut of the dollar interest rates by 0.75 percentage point," he said. Most of Arab Gulf states, which peg their currencies to the greenback, have cut their respective interest rates to match those of the dollar.

Taher pointed out that the recurrent crises in the United States and major world markets should prompt hundreds of billions of Arab surplus petrodollars invested abroad to return home.

Jordanian shares came under strong profit taking pressures last week, particularly blue chip firms led by the Jordan Phosphate Mines Co. and the Jordan Petroleum Refinery, which scored dramatic gains over the past weeks.

The all-share price index of the Amman Stock Exchange fell 2.39 percent last week, closing at 8,417 points from 8,623 points previous week, according to the ASE weekly report.

"We expect Jordanian stocks to remain in a steady phase pending the release of the first quarter results," Taher said.

Kuwaiti shares succeeded in resisting the negative pressures of the political developments in the country that culminated in the dissolution of Parliament following the resignation of the government, analysts said.

Kuwait's KSE all-share price index gained 1.3 percent last week, to close at 14,455 points compared with previous week's close at 14,270 points.

The all-share price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi shed 2.0 per cent this week, closing at 5,886 points from 6,008 points last week.

Egypt's CASE 30 index, measuring the performance of the market's 30 most active shares, declined 3.8 percent last week, closing at 10,905 points.

The GulfBase GCC Index also fell 3.10 percent to 6,661.58 points last week. The value of GCC traded shares plunged 17.71 percent to 13.35 billion and volume declined by 22.54 percent to 3.71 billion of shares.

BMG Saudi Index Continues to Decline

The BMG Saudi Index continued its downtrend for the third consecutive week in March, losing 4.6 percent, almost 24.89 points, to reach on Wednesday at 518.60 points. The total turnover descended by 8.3 percent to reach SR14.9 billion (4.0 billion) versus SR21 SR16.3 billion (4.3 billion) traded in the previous week. The average P/E ratio for 2006 earnings was 24.8 times, while the price-to-book ratio was 4.5 times.

All of the index sectors underperformed last week. The electricity sector went down marginally by 0.02 percent, whereas the industrial, services and insurance sectors moved down by 2.8 percent, 1.4 percent and 4.8 percent respectively. The agricultural and telecommunications sectors fell by 6.1 percent and 6.4 percent, whereas the worst performer was the banking sector, which depreciated by 8.4 percent.

The beta coefficient for the sectors was as follows: 1.05 for the banking sector, 1.02 for the industrial sector, 1.01 for the services sector, 0.95 for the agricultural sector, 0.74 for the electricity sector, 0.67 for the telecommunications sector, and, finally, 0.28 for the insurance sector.

The two leading shares, Al-Rajhi Bank and Saudi Basic Industries Corp. (SABIC), negatively performed last week, with Al-Rajhi Bank plunging by 8.57 percent to SR88 per share, while SABIC closed at SR174.25 per share, declining by 3.73 percent.


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