According to the Jeddah-based National Commercial Bank (NCB), profitability for 53 of the 72 listed companies - representing 96.1 per cent of market capitalisation - rose by 47.2 per cent year on year to SR 19,877 million ($5,301 million) in the first half of 2004. Traders have responded appropriately. The TASI rose by 8.1 per cent in July - more than many global bourses manage in a year - and moved ahead of the Doha Securities Market as the region's star 2004 performer. Turnover also climbed by 2 per cent to $35,600 million.

King among the profit makers was local blue chip Saudi Basic Industries Corporation (Sabic), which took advantage of strong world product prices to post first-half profits of SR 5,342 million ($1,425 million), a year-on-year increase of 67.5 per cent. Saudi Telecom also managed to grow net income by 23.9 per cent over the course of the period. Both were among the volume leaders in July. Saudi Electricity Company continued its recovery by reporting six-month profits of SR 57 million ($15.2 million), leading the way in both trading volumes and values. The banking sector also put in a strong first-half performance, with the nine listed banks recording a 31.6 per cent rise in combined net income to SR 6,385 million ($1,703 million).

Banks are watching carefully the approach of the long-awaited capital markets law, which offers both potential threats and multiple opportunities. The law took a major step forward in early July with the appointment of a five-member board to head the Capital Markets Authority, which will be charged with its implementation. The legislation is designed to underpin a deeper, more developed and better regulated capital market.

Also promising to deepen the market are a host of initial public offerings (IPOs). Sahara Petrochemical Companyled the way in early June, and found that the SR 300 million ($80 million)-worth of shares up for grabs were oversubscribed 125 times. Next in line is likely to be Almarai Company, a local dairy producer and exporter, which mandated two banks to arrange the share sale in mid-July. Others lining up to join the market are National Company for Co-operative Insurance (NCCI), Power & Water Utilities Company for Jubail & Yanbu (Marafiq) and a new Islamic bank to be formed imminently out of eight local foreign exchange houses. Further off but always on the horizon is the IPO of NCB, now unlikely to come to market before the end of the year.

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