(MENAFN - Arab News) Saudi shares led regional decline last week prompting other Arab stock markets to plummet.
The Tadawul All-Share Index (TASI) dived 8.4 percent last week to close at 5,862.31 points, spearheaded by the petrochemical sector, particularly the Saudi Arabian Basic Industries Corp. (SABIC). SABIC shares closed 13.28 percent down at SR80 last week.
The plunge was deeper before the market managed to trim its losses in the last trading day of the week.
"I think the market's concern stems from fears that the country's petrochemical exports will be affected as a result of the euro zone debt problem," said Ahmad Qahtani, an analyst at the Riyadh-based Ahli Capital.
He expected a change in earning assessments and advised investors to turn to government infrastructure projects and the retail sector.
The market saw losses every day of the week, including a 400-point (6.7 percent) loss on Tuesday, except for the rebound of around 100 points that the market managed to make on the last day of the trading week. Last week's negative sentiment prompted a negative divergence between the 5 and 20-week moving averages and pushed the market to an intra-week low, as well as a week close, well below the lower Bollinger band, with the RSI also falling to 35.07 on a week-to-week basis, the Financial Transaction House (FTH) said in its weekly market report.
On a week-to-week basis, sector trading saw losses all around, with losses ranging from 3.40 percent in the Energy & Utilities sector to a loss of 12.93 percent in the Petrochemical Industries sector, riding on intra-week losses in crude oil prices, which reached 67.87 a barrel, the FTH report said.
The top gaining companies for the week were Gulf General Cooperative Insurance Company and Mouwasat Medical Services Company, which saw very moderate gains of 1.38 percent and 1.21 percent respectively. Company losses were definitely more widespread and stronger, with the top declining company for this week, Al-Sagr Cooperative Insurance Co., losing 20.48 percent.
The value of traded shares, however, increased to SR23.32 billion last week compared to SR20.46 billion in the previous week.
Arab stock markets tumbled last week amid panic selling by investors who feared the euro zone debt crisis could unfold further and aggravate the slump on global bourses, financial analysts said Friday.
They attributed the plunge partly to the falling oil prices which at a certain juncture slid below 65 per barrel this week before bouncing to 75 on Thursday.
Saudi shares were the region's main loser last week, led by the petrochemical sector, due to predictions that the euro zone credit crisis could drastically cut European imports of Saudi petrochemical products, analysts said.
However, analysts expected Saudi and other Arab stocks to rally this week due to the rapid rise in oil prices on and the rebound of the Wall Street and other world markets on Thursday and Friday.
"I believe the rally of world markets over the past couple of days and the sharp rise in crude prices will give a boost to Arab stocks particularly in the Gulf region," Wajdi Makhamreh, CEO of the Amman-based Noor Investments brokerage, said.
"What happened last week was that regional investors had come under the impact of unjustified psychological pressure from the euro zone debt ordeal and concerns that it could go beyond Greece to involve other countries," he said.
He warned that Middle East stock markets could witness renewed plunges if European countries failed to work out sustainable solutions for debt difficulties facing some EU countries.
Jordanian shares also came under pressure from the decline of regional stock markets and reported shortage in liquidity.
The all-share price index of the Amman Stock Exchange shed 2.47 percent last week, closing at 2,421 points, according to the ASE weekly report.
Kuwaiti stocks rebounded in the last two days of the week, finding support from blue chips particularly the Zain group.
On weekly basis, Kuwait's KSE all-share index lost 3.6 percent, closing at 6,810 points.
The benchmarks of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi dived 5 percent last week, to close respectively at 1,605 points and 2,641 points.
Egyptian shares rebounded in the last two days of the week due to intensive demand by both local and foreign investors and managed to offset a major part of their losses earlier in the week.
Egypt's AGX index shed 1.3 percent last week, closing at 6,338 points.
By Khalil Hanware & Abdul Jalil Mustafa