(MENAFN - Arab News) Speakers at a symposium on the Saudi stock market performance held out an assurance yesterday that the Saudi economy will remain one of the best in the world in terms of its stability and strength and that will boost the performance of Tadawul.
They attributed the recent decline in the share value to the tendency among some investors to monopolize the market and indulge in negative behavior and speculation, according to Mohamad Fahd Al-Emran, member of the securities committee of the Riyadh Chamber of Commerce and Industry (RCCI).
He added that there was some negative behavior on the part of some investors in addition to lack of experience in the market. "There was a logical rise as a result of the booming economy in the country and the huge 2012 budget of the Kingdom," he explained. However, despite these positive forces on the economic front, there was some negative behavior and speculation by vested interests that the market would be thrown open to foreigners.
They look at the world economic impact on the Saudi market, but others disputed the idea saying that 90 percent of the investors in the stock market here are individuals and why they should be affected by the economic slowdown in the United States and EU.
The RCCI's securities committee organized the symposium, which comes in the wake of the chamber's efforts to enlighten stock market dealers on how to safeguard and promote their investments. It will also shed light on a number of local and international economic issues, which impact the Kingdom's economy and stock market.
Economists and stock market experts addressed the symposium presided over by RCCI board member and head of Securities Committee Khalid Al-Migairin. Tala't Zaki Hafiz, member of the securities committee, Abdul Hamid Al-Omari, member of Saudi Economic Association, and Ibrahim Saleh Al-Dawsari, writer and economic analyst, also addressed the gathering.
Al-Migairin said the symposium aimed to diagnose the reality and future trends of Saudi stock market in the light of market recovery.
The symposium dealt with positive and negative factors that have affected the performance of the stock market recently in addition to other factors that may improve the performance of some companies' shares and the role of share index in measuring performance of the market in the upcoming period, he said.
Giving his personal analysis, Ibrahim said there is great concern that these negative factors at the global level might have an adverse impact on the Saudi market. "What happened to the world economy? The decline happened in the world stock market has prevented Saudi stock from going up," he added.
However, he assured the investors that financial index in Saudi Arabia is excellent. The index is expected to go up under the right conditions, he explained.
Al-Omari reaffirmed that an investor must have an experience in the stock market and invest with full facts and knowledge. He said that Saudi Arabia's economy is the best in the world in terms of Saudi economic performance and liquidity but what we need is sound management and conscious investment. "People should invest in a productive company with good track record," he said.
He suggested that those who do not have enough experience of the market could invest their funds through banks. Such an investor can monitor his investments online as banks do the job of selling and buying on his behalf.
Meanwhile Jadwa reports said that listed companies are forecast to grow by 14 percent in 2012. The industrial investment sector will record the fastest rate of growth in the first full year of production from Maaden's massive phosphate facility. Rising stock markets and the strong local economy will also cause a notable rise in earning for multi-investment companies. However, in both cases Jadwa believes that most of the gains have already captured in share prices.
Jadwa said the largest sectors of the market, petrochemicals and banks, offer the best value. Most of the gains so far this year have been led by smaller sectors, with speculative investors pushing valuations to well beyond those justified by the fundamentals. Returns on investments in banks and petrochemicals sector have been much smaller and their valuations are much healthier.
The experts will also explore whether the market will keep its upward trend, in terms of liquidity or trading volumes, and how investors, specially retailers, have to deal with such changes, he said.
According Jadwa Investment report, the Saudi stock market has had a strong start this year; the TASI has hit three-and-a-half-year high and volumes have surged. This reflects a clear revival of investor confidence driven by a combination of local, regional and global factors, "We expect further gains in the TASI during the year, but then that the recent rate of growth will not be maintained."
The report said, at the moment bullish investor sentiments point to the TASI ending 2012 well above this level. However, it is cautious about prospects for the rest of the year. Valuations look reasonable and unlike.