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Sunday, 19 August 2007

Alahli Takaful Shares Jump almost 1,000% on Debut - KSA

JEDDAH, 19 August 2007 � Shares in Alahli Takaful Company (ATC) made a hefty gain of 997.50 percent on debut on the Saudi stock market (Tadawul) yesterday. The SR10 Alahli Takaful shares opened at SR109.75 and stayed in that level at the closing.The other new insurance companies also made solid starts on Tadawul. Alahli Takaful is the 10th company to be traded in the insurance sector that was dominated earlier by the National Company for Cooperative Insurance (NCCI). NCCI shares edged higher by 10 percent to SR134.75 yesterday.Shares in the newly listed Malath Cooperative Insurance and Reinsurance Company jumped 9.95 percent to SR110.50, Arabian Shield Cooperative Insurance Company by 9.93 percent to SR80.25, Sanad Insurance & Reinsurance Cooperative Co. by 9.86 percent to SR78, the Mediterranean & Gulf Insurance & Reinsurance Co. by 9.78 percent SR61.75 and Saudi United Cooperative Insurance Co. by 9.68 percent to SR76.50. Basil Al-Ghalayini, CEO of BMG Financial Group, told Arab News that "although the insurance sector is a promising growing sector in the long run with these small insurance IPOs (initial public offerings), it is clear traders are eyeing the insurance sector as their new prey. We have witnessed these big price jumps on the first day of listing followed by gradual systematic increases with most of the new companies, which in some cases, reaching unrealistic levels of over 1,800 percent." He added: "This obviously has nothing to do with credentials or the management of these companies, since most of them are still greenfields, but instead it reflects the trading streak of hungry traders who are taking advantage of the unique characteristics of the insurance sector."Fahd Salman, a stock market expert, said the Saudi market has been accustomed to the volatility of the prices of the insurance company shares and some of the traders compare it with "playing with fireworks" as the entry of these shares cause an explosion.Salman added that from an investor's point of view, despite the high quality of insurance stocks worldwide, the kind of rising stock prices in our markets could not be triggered except by the investment goal. However, some of the prices have reached levels that one cannot expect to get returns in less than five years. This situation showed that speculation pushes up the sector to higher rates. - (MENAFN - Arab News)

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