The early-December slump on the TASI followed a market rally in October and November, when shares rose by 11.6 per cent and 13.2 per cent respectively. The correction came in response to a 13 per cent drop in oil prices and 'selling pressure by investors accumulating liquidity for the upcoming IPO [initial public offering] of National Company for Co-operative Insurance [NCCI]to start on 21 December', according to Bakheet Financial Advisers (BFA).

However, with corporate earnings for the full year expected to be significantly up on last year's and the strong performances likely to continue into 2005, analysts now expect the TASI to head for the 9,000-point mark and beyond. The upwards trend is supported by a combination of strong oil prices, a solid 2005 government budget, high domestic liquidity and ongoing reform measures, such as the publication of four key by-laws under the capital markets law by the Capital Markets Authority (CMA) on 1 December.

According to the Market Review & Outlook report released by Jeddah-based National Commercial Bank (NCB)on 14 December, the TASI's market capitalisation has almost doubled since the end of 2003. 'The rise in equity prices so far this year has boosted total market capitalisation to SR 1,126,600 million [$300,400 million] on 30 November, compared to SR 590,000 million [$157,000 million] in December 2003, giving an absolute increment of SR 536,600 million [$143,100 million] in the wealth of investors,' the report said. 'The Saudi equity market has thus created a considerable amount of additional wealth during the 11 months to November, representing an equivalent of nearly 66 per cent of total nominal GDP [gross domestic product] of 2003.'

With the equity market booming, a number of other companies are gearing up to launch IPOs in the next 12 months, including dairy firms Saudi Dairy & Foodstuff Company (Sadafco)and Almarai Company, Saudi Arabian Mining Company(Maaden), The Power & Water Utilities Company for Jubail & Yanbu (Marafiq) and NCB.

www.meed.com/companies