The key factors buoying the market have changed little over the course of the year: soaring liquidity driven by record oil prices has fuelled healthy economic activity and strong profitability among local listed firms. Saudi Basic Industries Corporation (Sabic)led the way on 20 October by reporting a SR 9,556 million ($2,548 million) profit in the first three quarters, up by 101 per cent on 2003. 'Being the largest listed stock, Sabic's announcement drove the latest upswing,' says Beshr Bakheet of Bakheet Financial Advisers. ' STC [Saudi Telecom Company] is another big cap that is doing well, recovering - as other incumbent regional telcos have done - from the negative sentiment in the immediate aftermath of the award of the second mobile licence.' STC made a SR 7,700 million ($2,050 million) nine-month profit, a year-on-year increase of 17.7 per cent.

Saudi Electricity Company (SEC)has performed consistently well over the last three months - even ahead of its own impressive reported profits. SEC shares accounted for the highest value and volume of trades in both August and September and continues to reap the benefits of the government's ambitious power generation expansion plans. Overall, market trading dipped slightly in September, possibly reflecting liquidity being held back for the Etisalat initial public offering (IPO).

The Etisalat IPO had the rare effect of bringing the kingdom's capital market to world attention, with various global media outlets picking up on stories of fights breaking out in the scramble for scarce application forms, and even of a disgruntled would-be investor ramming his car into his local bank branch in fury at being turned away empty-handed. Early indications suggest that the 20 million shares on offer have been oversubscribed more than 30 times (see Banking & Finance). The hunger bodes well for the host of other offerings around the corner, among them shares in National Company for Co-operative Insurance, Almarai, Sadafcoand the new Al-Bilad Bank.

And according to Bakheet, investors are also becoming more discriminating. 'The market is maturing,' he says. 'In spite of the bull run, certain speculative companies have lost out as investors realise they are an unwise gamble.' Looking forward, the petrochemicals sector continues to appear a good bet, particularly the well-established and expanding companies like Sabic and Saudi Fertiliser Company (Safco). But with benign macroeconomic conditions set to persist for the foreseeable future, the bulk of stocks are likely to maintain their inexorable climb.

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