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Tue 25 Sep 2007 03:17 PM

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Saudi bourse buoyed by lifting of market restrictions

Market index rises following decision to allow Gulf Arab citizens to trade on exchange.

Saudi Arabia lifted remaining restrictions on share trading by Gulf Arab citizens on Tuesday and the main index rose on expectation of fresh demand.

Nationals of Kuwait, the UAE, Qatar, Oman and Bahrain can now trade in all Saudi stocks, the Capital Market Authority (CMA) said in a statement posted on the Saudi bourse website late on Monday.

Other Gulf Arab nationals had previously been restricted from investing in listed Saudi banks and other financial services.

"Prices are going to increase so Saudi investors are buying now before they rise," said Youssef Kassantini, chief executive of Riyadh-based Bourse Experts. "We are seeing buying across board."

The Saudi market, the Arab world's biggest, has lagged behind its Gulf Arab peers this year, all but two of which crashed in 2006 as investors judged prices outweighed earnings expectations.

The Saudi index was up 0.71% at 7,917.58 points at 1016 GMT, but still down 0.9% this year to Monday's close, making it the only loser in the Gulf.

By contrast, indexes in Kuwait, Oman and Abu Dhabi have soared by between 16% and 28%.

"The expectation is for the market to go to 10,000 points at least before the end of the year," said Kassantini.

Gulf Arab states agreed in 2002 to give each others' citizens equal rights in all economic activities and set 2007 as the deadline for implementation.

In 2005, the kingdom, the world's largest oil exporter, said it would open its stock market to fellow Gulf Arabs, then backtracked, saying banking and insurance would remain off-limits for several months.

The five other members of the GCC allow each others' citizens full access to listed stocks.

"The Saudi Stock Exchange should treat with complete equality citizens of the Gulf Cooperation Council and Saudi citizens with regards to owning and trading in listed shares," the CMA said in Monday's statement.

Saudi Arabia forbids other foreigners, except those resident in the kingdom, from investing directly in the market, though they can through funds.