04/05/2011
Saudi equity market cap reaches SR1.35 trillion
The Saudi stock market declined as most Gulf markets gave back gains on Tuesday. Petrochemical stocks headed losses on the Saudi bourse, with Saudi Basic Industries Corp. (SABIC) and Saudi Arabian Fertilizers Co. (SAFCO) falling 0.89 percent to SR111 and 0.56 percent to SR178, respectively.
The Tadawul All-Share Index fell 0.38 percent to close at 6,694.14 points on Tuesday.
The petrochemicals index ended down 0.72 percent to 6,999.89 points, but analysts said it was likely to bounce back on the back of strong first-quarter earnings and high oil prices, Reuters reported.
John Sfakianakis, chief economist at Banque Saudi Fransi, said: "The fall in the market is expected given that the market has seen some upside prior and during the quarterly announcements season. The market should consolidate around current levels but a further upside shouldn't be eliminated given that oil prices, good results from petrochemical companies as well as banks should give confidence to the market."
The stock market turnover on Tuesday reached SR4.57 billion.
According to Tadawul's Monthly Statistical Report for April, the TASI closed at 6,710.56 points at the end of April, gained 147.71 points (2.25 percent) over the close of the previous month.
On an YTD basis, TASI registered a positive return of 1.36 percent (89.81 points). Highest close level for the index during the month was 6,724.26 points as on April 24, the Tadawul report said.
Total equity market capitalization at the end of April reached SR1.35 trillion ($358.93 billion), increased by 2.04 percent over the close of the previous month. The total value of shares traded in April reached SR112.12 billion ($29.90 billion), up by 3.00 percent over the previous month.
The report added total number of shares traded reached 5.01 billion shares during April compared to 5.59 billion shares traded for the previous month, decreasing by 10.30 percent.
The total number of transactions executed during April reached 2.45 million compared to 2.36 million trades for the month of March 2011, increasing by 3.87 percent. The trading days at Tadawul during April totaled 21.
"The performance of Tadawul, as indeed that of other regional indexes, suggests that the situation in the equity markets has broadly normalized. Encouragingly, two IPOs (initial public offerings) are currently under way in the region, one in Abu Dhabi (the real estate company Eshraq) and one in Saudi Arabia (Saudi Integrated Telecom Company). This is a welcome development after a quarter that saw only one small mandatory IPO by insurance house in Abu Dhabi. In addition to the recovery in the benchmark indexes, regional bourses have seen sharp rises in trading volumes to levels last seen in the first half of 2010," Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said.
He said the positive momentum of Tadawul has benefited significantly from the positive economic momentum created by the substantial increase in government spending which has prompted analysts to substantially upgrade their growth forecasts for this year to historically high levels of 5.5 percent and more. This should support valuations almost across the spectrum and additional support will likely continue to come from robust oil prices.
"In the near term, the reaction to the Osama Bin Laden killing has led to an oil price correction and boosted the value of the dollar. This, however, is likely to be a relatively short-term effect of an unusual event and the combination of unconventional monetary policy and emerging market growth still provides support for the commodity story," Kotilaine said.
