16/06/2015 08:06 AST
Saudi Arabia's stock exchange, valued at $585 billion, has opened up to direct foreign investment for the first time.
Investors say opening up the stock market may not attract an immediate influx of foreign investment, but is a sign that the Kingdom is further liberalizing its economy.
The Saudi market trades more than $2.4 billion in daily value compared to the $18.2 billion traded in all of emerging markets on daily basis representing 13 percent of emerging markets liquidity, according to data compiled by SEDCO Capital.
The bourse is up 14.74 percent so far this year. But the Tadawul All-Share Index (TASI) dropped on Monday as modest trading volumes indicated there were no big fund inflows from abroad on the first day that the market opened to direct foreign investment.
Only one foreign institution, HSBC, declared that it had obtained a license to invest and traded shares on Monday. Tadawul CEO Adel Al-Ghamdi told Reuters earlier that regulators were processing six applications.
John Sfakianakis, Middle East director at Ashmore Group, commented: “The opening up of the market is very important because Saudi Arabia has both the scale and wealth and they are among the few within the Emerging Market space that can command such prowess.”
Speaking to Arab News on Monday’s market developments, he said: “The event of Saudi Arabia opening up is a very positive development for the entire Gulf region.”
Bassel Khatoun, chief investment officer — MENA Equities, Franklin Templeton Investments, commented: “We view the opening of the Saudi stock exchange to foreign direct investment as a constructive, and indeed, positive development for the market. With a capitalization that exceeds $550 billion, the Tadawul is the region’s largest, and compares to major emerging markets such as Turkey, South Africa and Russia in scale.”
He added: “While we do have access to the market through promissory notes, we are currently exploring options to enter the market as a qualified foreign investor and are working closely with the relevant authorities and our internal teams.”
Hasan Al-Jabri, CEO of SEDCO Capital, said: “The opening of the market comes as part of a continuing policy to deepen the equity market and broaden the investor base. Over the last decade, the Saudi Capital Market Authority has pursued several steps to make the Saudi market attractive to foreign investors, including aligning working days with other regional and international markets, improving corporate governance standards and disclosure norms by making quarterly earning disclosures mandatory for listed companies.”
Al-Jabri said that Saudi Arabia's Capital Market Authority is among the most respected in the Middle East.
The CMA has clamped down on several occasions to ensure market participants comply with listing and reporting regulations, he pointed out.
Yazan M. Abdeen, lead MENA Fund Manager and head of MENA Liquid Assets at SEDCO Capital, explains why the appeal of the Saudi market is equally immense and irresistible. He said: “Saudi Arabia has simply put itself at the centre of the global investment scene with its opening to foreign investors.”
For more on this
Click Here
Arab News
Please wait...
