Saudi shares at an all-time high

Saudi Arabian shares hit an all-time high last week, and the all-share index closed 3.3 per cent ahead at 2,660.02 points. Two factors encouraged investors to take an optimistic view at a time when the major global stock markets are still suffering from a major bout of pessimism.

First, there was the $2 billion overseas investment by Saudi Arabian Basic Industries Corporation in a Dutch petrochemicals plant. Investors appeared as impressed by what this said about a more outwardly directed corporate strategy as by the deal itself in this rather mature sector.

It was also the largest foreign acquisition ever by a Saudi Arabian company, or any company in the Middle East for that matter. Sabic's shares rose by 9.3 per cent to 170 riyals after the news.

Secondly, the Saudi banking sector came out with a string of strong profit rises for the first quarter of 2002, and there is nothing a stock market likes better than the announcement of profit growth. Arab National Bank gained 4.6 per cent to 291 riyals and Saudi British Bank put on 4.5 per cent to 375 riyals on its 20 per cent increase in Q1 profits.

The Kuwait Stock Exchange also powered a further 2.5 per cent higher in the week, and ended at 1,943.5 points. The KSE is up by 13.7 per cent so far this year, and analysts think the 2,000 point barrier may be broken next week.

Underpinning stock price rises in both Saudi Arabia and Kuwait is the very healthy level of oil prices, and an oil revenue outlook that is greatly improved on just a few months ago.