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Law's delay holds up market expansion

Bankers are eager for the implementation of Saudi Arabia's capital markets law. But this won't happen until the regulator's chairman is appointed

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ABDULLAH AL-SUWEILMY, the general manager of the Saudi Stock Exchange, has the air of a contented man. For although there are periodic bouts of profit-taking in the market, there seems to be no end to the boom in equities and the positive developments look set to continue as more companies line up to make initial public offerings.

The figures for the first quarter of the year ? which is normally a quiet time in the Saudi equity market ? make breathtaking reading. Turnover is up 500% on the same period in 2003, and volume is up nearly 340%. Total market capitalization, boosted by the flotation of Saudi Telecommunications, has risen by 89% to $178 billion.

Investors, who are still reluctant to put money back into western markets, are confident about Arab economies, particularly as oil prices remain high. Regional investment bankers point out that P/E ratios are still good even in companies, such as Saudi Telecom and Saudi Arabian Basic Industries Corporation (Sabic), where share prices have powered ahead.

?We expect Gulf markets like Saudi Arabia to grow at less than the dramatic increases of last year but they are strong and should rise by about 10%,? says Haissam Arabi, head of asset management ? Arab equities at Shuaa Capital, one of the leading Arab investment houses.

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