Saudi equity market cap falls to SR1.48 trillion in April

Saudi traders monitor stocks at a in Riyadh. (Reuters)

By KHALIL HANWARE | ARAB NEWS STAFF

Published: May 5, 2012 01:33 Updated: May 5, 2012 01:38

JEDDAH: After a stellar performance in the first quarter of this year, the Saudi stock market failed to maintain the positive momentum in April.

At the end of April the Tadawul All-Share Index (TASI) closed at 7,558.47 points, down 276.68 points or 3.53 percent over the close of the previous month, according a monthly report for April by Tadawul available on its website.

However, on an YTD basis the index registered a positive increase of 17.77 percent (1,140.74 points). The report said highest close level for the index during the month was 7,930.58 as on April 3.

Paul Gamble, chief economist and head of research at Jadwa Investment, said: The dip in the TASI in April was not surprising after the strong gains over the previous few months and was driven mainly by investors taking profits after the recent share price rises.”

However, Gamble added: “Weaker global markets also contributed; some economic data disappointed and political uncertainty has increased in the euro zone.”

He also said first quarter results of listed companies, issued during April, were reasonable.

The Tadawul report said total equity market capitalization at the end of April reached SR 1.48 trillion ($395.03 billion), declined by 3.78 percent over the close of the previous month.

The total value of shares traded for the month of April 2012 reached SR 270.09 billion ($ 72.02 billion), fell by 15.41 percent over the previous month.

The total number of shares traded reached 12.69 billion shares in April compared to 15.02 billion shares traded for the previous month, decreasing by 15.52 percent.

The total number of transactions executed during April 2012 reached 5.15 million compared to 5.61 million trades for the month of March 2012, falling by 8.26 percent.

Commenting on Tadawul’s April performance yesterday, Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: “The main reason for Tadawul’s seeming underperformance is doubtless the uncertain global bankdrop, above all the situation in the euro zone. This has directly hit the market due to worries about oil demand erosion and the effects of this on the oil price, especially at a time when some of the political risk considerations appear to have subsided somewhat.”

Although, he said, the banking sector is well capitalized, the European risks naturally translate into worries about disruptions, bad loans, and tighter market conditions.

“Overall, the performance of Tadawul was not bad and if anything, it should assuage some the fears about a potential bubble,” Kotilaine said.

Nonetheless, he said: “The return of volatility clearly highlights the interdependent world we live in. This remains a risk factor also going forward as the euro zone situation will clearly defy any near-term solutions.”

April was a month of slowdown with cooling off after reaching the highest point of 7,900 since the start of the year, said Sami A. Al-Nwaisir, chairman of the board, ALSAMI Holding Group. This meant that the index lost approximately 6 percent, which brought the net performance to 17.7 percent. There are some main reasons for that retreat in the index: First, Profit taking after achieving high performance of nearly 24 percent. Second, end of the first quarter for most companies, which meant some change to assets allocations and positions based on new views. This is no surprise due to the fact most players in the market are traders rather than investors. Also, the market features 93 percent individuals rather than institutions. Third, this is very important since the issuance of a serious warning by Custodian of the Two Holy Mosques King Abdullah not to indulge in market manipulations or violate the market rules. This has sent strong waves to some serious players in the market.

Meanwhile, the GCC markets were also down in April, losing 3.2 percent following an increase of 6 percent in March and 7.6 percent in February, Kuwait Financial Centre (Markaz) said in its new report.

Qatar, which lost 1.2 percent in April, was the only GCC market with a YTD loss. Oman remained in the green, and witnessed a 3.2 percent gain last month.

Volume was down 25 percent in the GCC and value of traded shares also decreased 18 percent to $77 billion. Bahrain (-70 percent) witnessed the largest drop in liquidity over the month and Saudi Arabia, which accounted for 91 percent of GCC’s total value traded, registered an 18 percent drop.

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