RIYADH, 5 April 2006 — Saudi shares climbed 2.2 percent yesterday, buoyed mainly by blue-chips Saudi Telecom Co. (STC) and Al-Rajhi Bank which surged ahead of a share split this week. “What we saw today underlines the strong return of speculation to the market. Investors, retail and big private portfolios, bet on a likely rise in banking and telecoms stocks after the share split,” a senior trader said.

Bourse authorities last week began a gradual 5-1 share split to make stock prices affordable to a larger proportion of the more than 3 million retail investors. Several stocks trade at hundreds of dollars per share. Many retail investors lack basic knowledge of market fundamentals and mechanisms and seek quick profits.

On Thursday, the split will apply to sectors which include several of the market’s heavyweights. STC and Al-Rajhi are two of the three largest listed firms.

The all-share index closed at 17,674.43 points on a turnover of SR24.7 billion ($6.6 billion), up from SR24.4 billion a day earlier. Nearly a quarter of turnover was on STC, Al-Rajhi and Bank Albilad. Al-Rajhi added 5.72 percent to SR2,549, STC gained 4.3 percent to SR1,205 while Albilad rose 4.83 percent to SR868.

Financial consultant Walid ibn Ghaith said that, in addition to the share split, the upcoming announcement of first-quarter results contributed to the rush on telecom and banking shares. “Investors are placing their highest bets on the two sectors as far as the results are concerned,” he said. “SABIC for instance is most likely to show results that are very close to the fourth quarter,” he said.

On Monday the index added 0.45 percent after it jumped 3.5 percent on Sunday to a three-week high, as the market tries to bounce back from a sharp correction that started in late February following a long rally. “It’s difficult to tell whether the index will keep rising after the sharp fluctuations we have had in such short span,” Ghaith said, noting that the index gained had 3,000 points in ten sessions.