The Saudi stock benchmark Tadawul All Share Index (TASI) started its positive run from Dec. 1, 2011 to April 3, 2012 generating a 30 percent uplift in value from 6,100 to 7,900. Total profits of the market for Q1 2012 grew by 14 percent compared to Q1 2011, which translates to an increase from SR 14.8 billion in Q1 2011 to 16.8 billion in Q1 2012, Alkhabeer Capital said in a research study Sunday.
Within this jump, Transport and Real Estate were the two biggest market outperformers and they also generated the highest profit growth, which proves that the rally was not completely speculative rather it had strong fundamentals to support it.
However, Transport and Real Estate make up approximately 5.2 percent of the total market capitalization and therefore did not contribute significantly to the 30 percent growth in TASI.
Both Petrochemicals and Banks underperformed the market in terms of price growth during the period between Dec, 1, 2011 and April 3, 2012. Yet, based on market capitalization, they were the highest growth contributors in the period. Petrochemicals profits for Q1 2012 compared to Q1 2011 declined by 12 percent whereas banking profits for the same comparison grew by 46 percent. This suggests that the banks are likely to outperform the market in terms of price movement going forward, the report said.
Both, Agriculture and Food Industries as well as Media and Publishing sectors have performed poorly in terms of profit growth for Q1 2012 compared to Q1 2011. However, they have outperformed the market in terms of price movement. Therefore, going forward these sectors are likely to underperform.
Energy and Retail sectors are also expected to outperform the market in price movement.
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