(MENAFN - Arab News) NCB Capital has analyzed the recent increase in stock market activity in Saudi Arabia in its new report. The study found an inverse relationship between the nominal stock price and the stock performance YTD.
The report said daily traded value at Tadawul during the year so far has averaged at SR10.3 billion, 149 percent higher than the same period in 2011. The daily average value traded during 2011 was SR4.4 billion.
The highest value traded in a single day in 2011 was SR7.0 billion with the lowest being SR2.0 billion (a range of SR5.0 billion). The lowest traded in 2012 YTD was SR5.0 billion with the highest at SR21 billion (a range of SR16 billion). Daily turnover in the last 11 trading sessions has averaged SR17 billion, in line with the average in 2007 at SR17.1 billion, according to the NCB Capital analysis which was carried out for the period from Jan. 1 until March 24, 2012.
Based on analysis, the report found that the highest percentage of value traded (34 percent) YTD has come from stocks with nominal prices under SR15 (up from an average of 18-19 percent in 2010-2011). This is despite the SR0-15 segment having only 18 stocks and the SR35-65 segment having 42 stocks.
The fact that the SR0-15 segment has value traded more than twice the amount of the SR35-65 segment, even though the latter has twice the number of stocks than the former, indicates the strong preference from local investors for the lower nominal priced stocks.
The NCB Capital report indicates an inverse relationship between the category of the stock price (as of Jan. 1) and the year to date performance of the stock. On
average the stocks with a nominal price above SR35/share have underperformed the TASI on a YTD basis while stocks with a nominal price below SR35/share have outperformed the TASI.
The stocks with lower nominal values have outperformed the stocks with higher nominal values. But an important observation is that the lower nominal priced stocks have also been more volatile than the higher priced stocks. On average the SR0-15 category of stocks have seen a range of up 2.16 percent on a positive day and down 1.31 percent on a negative day.
However, the SR90 stocks have a range averaging up 0.71 percent on a positive day
and down 0.81 percent on a negative day. The relationship is also inversed in terms of volatility and nominal stock prices.
The NCB Capital findings show that YTD the SR0-15/share stocks, on average, have risen above 2 percent on 14 trading sessions, compared to the 3 days for the SR90/share category.