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MENAFN - Arab News - 10/08/2008

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(MENAFN - Arab News) The Saudi stock market index tumbled to a 41-week low yesterday ahead of the implementation of a rule to name investors with stakes of five percent or more in listed companies. Tadawul will start publishing names of investors on a daily basis from next Saturday.

The Tadawul All-Share Index (TASI) plunged 277.09 points or 3.28 percent to close at 8,173.97 points in thin trading yesterday. It fell 3.31 percent last week. The index is the worst performer in the Gulf Arab region this year as it is down 25.95 percent or 2,864.69 points so far this year after closing at 11,038.66 at the end of last year.

The only gainers yesterday were Saudi Public Transport Co. (SAPTCO), Malath Cooperative Insurance and Reinsurance Co., Saudi Indian Company for Cooperative Insurance and Alabdullatif Industrial Investment Co. The stock market turnover was thin at SR3.50 billion with 98.27 million shares changing hands.

Shares in the three largest listed firms — Saudi Basic Industries Corp. (SABIC), Al-Rajhi Bank and Saudi Telecom Co. (STC) — dropped 3.24 percent, 0.61 percent and 3.55 percent respectively.

John Sfakianakis, chief economist at SABB (Saudi British Bank), said the market's drop had more to do with psychology than the fundamentals of the Saudi equity market. The fundamentals behind the Saudi equities were very strong, given the robust earning results for the first half of the year.

"Double digit year-on-year growth for many corporates should be exhilarating news at a time when global equities are going through acute volatility. Repositioning of assets has taken place and we are now witnessing impulsive selling among small shareholders. Although there might be some additional repositioning in the future, bringing the index to a corrective mode, the fundamental side of the story should prevail."

He added: "Again, the CMA's (Capital Market Authority) announcement of the 5 percent ownership rule is a positive development and essential in trying to put an end to the unfounded negative sentiment. In the long run, we should see stocks trail toward their fundamental value. In addition, the volumes being traded are extremely low and as a result any upward or downward movement is super magnified."

Yesterday, the selling side took the leading role, Sfakianakis said.

Commenting on the plunge, Snehdeep Fulzele, head of research at the Riyadh-based Falcom Financial Services, said: "Investors shouldn't panic as they need not look at buying the complete market. Instead they would be better off in picking the stocks with consistently growing bottom line."


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