- Title: SAUDI-STOCK EXCHANGE Saudi stock exchange opens to direct foreign investment
- Date: 17th June 2015
- Summary: VARIOUS OF TURKI FADAAK, RESEARCH AND ADVISORY MANAGER OF ALBILAD CAPITAL WORKING IN HIS OFFICE
- Embargoed: 2nd July 2015 13:00
- Keywords:
- Location: United Kingdom
- Country: United Kingdom
- Topics: General
- Reuters ID: LVAEZL2EI10HRSNL5IJECGK3IKH0
- Aspect Ratio: 16:9
- Story Text: Saudi Arabia's stock market edged up in early trade on Monday (June 15) as it opened to direct foreign investment, although there was no clear sign of any new inflows of funds from abroad and trading remained dominated by local retail investors.
Saudi Arabia announced last July that it would permit direct foreign purchases of shares in the first half of 2015, as a way to expose companies to market discipline, diversify the economy beyond oil and create jobs?.
The chief executive of Saudi Arabia's stock exchange Adel al-Ghamdi said on Monday he expects the first flurry of licenses allowing foreign investors to buy shares there in the next few weeks.
"I believe that there will be a spike, an initial spike in terms of qualification and investment, and I think that will stabilise over time. I think ultimately foreign investors are looking for us to arrive at emerging markets status before they commit significant funds to our market. I think that will take a bit of time for that to happen. We're not in a hurry because ultimately the objective of the framework again is not to attract, attract fund flows from foreign investors, but also, but, as I mentioned earlier, to harmonise with international community, to bring more sophisticated investors in our market, and to accelerate some of our convergences to higher standards of practices, if you like, in our market, corporate governance, investor relations and so forth," Ghamdi told Reuters in London.
Although the Saudi market regulator has said foreign institutions can buy stocks directly from June 15, it has not so far announced the award of any licences permitting specific institutions to do so, and it is not clear when the first batch of licences will be granted.
Only one foreign institution, Ashmore Group, has publicly declared it has applied for a licence. John Sfakianakis, Riyadh-based Middle East Director at Ashmore, told Reuters on Sunday that Ashmore expected to receive it this month, but did not elaborate.
"On the short term, the foreign investors may not see a large difference in the capital market, especially a lot of investors who have shown interest in this market have already invested through swap agreements. Once the market matures a bit more, there will be, may be, different opportunities than that we have today in various sectors. These opportunities would be attractive then for a lot of investors," Ayham Al-Yousef, CEO of Albilad Capital, told Reuters in Riyadh.
Fresh fund flows into Saudi Arabia in the initial months may be moderate - perhaps only hundreds of millions of dollars a month - partly because share valuations are currently quite high.
Turki Fadaak, Research and Advisory manager of Albilad Capital, told Reuters:
"Saudi Arabia opens today the doors of its stock market, the largest in the Arab world with market capitalisation of $566 billion, for direct investment by qualified foreign institutions."
The market opening is likely to start the process of incorporating Saudi Arabia into major equity indexes such as those run by MSCI, which will eventually attract tens of billions of dollars. - Copyright Holder: REUTERS
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