RIYADH — Saudi Arabia is on track to open its stock market to foreign investors by the end of June, the market's chief regulator said on Monday. A final date will be announced after relevant regulations are issued but it “will be before the end of the first half of 2015,” said Mohammed Al Sheikh, chairman of the Capital Market Authority.
“Currently we are processing the comments we are receiving from the public,” he told the 8th Annual Global Competitiveness Forum 2015 in Riyadh on Monday. The event brings together world business leaders and top officials in the Kingdom.
Saudi Arabia is a member of the G20 group of major world economies.
“We announced way back that in the first half of 2015, which is until the end of June, we would open up the market, and we are still on track.”
Penny-stock players, however, will not be welcome on the expanded Tadawul Stock Exchange, the largest Arab bourse.
“We really want to attract large, sophisticated, experienced institutional investors and the requirements actually show that,” Al Sheikh
He added that the regulator would issue a final version of regulations covering the opening “very soon”. Last year, the CMA released draft regulations for public comment, including minimum requirements that foreign institutions would have to meet to become qualified investors. The Saudi stock market rose on Monday as it traded for the first time since the Custodian of the Two Holy Mosques King Salman succeeded his brother King Abdullah, who died on Friday. The stock benchmark Tadawul All Share Index climbed 0.7 percent to 8,480 points.
Other bourses in the region were neutral or negative.
After assuming power, King Salman pledged continuity in energy and foreign policies and appointed younger men as his heirs, appearing to settle the succession issue for years to come.
Investors reacted positively to the smooth succession and the kingdom's main index added 0.7 percent as most stocks closed higher.
Food makers Savola Group and Almarai were among the main supports, adding 4.0 and 2.5 percent respectively. Shares in major real estate developer Dar Al Arkan surged their daily 10 percent limit in their heaviest trade since July 2012, extending a leg up which started after the company published its fourth-quarter results last week.
Its profit fell 26.3 percent and missed analysts' forecasts, but some investors may be looking ahead to stronger results this year.
Some analysts think the Saudi succession could benefit the stock market because King Salman will face pressure to ensure public support with state sector wage increases and other populist steps that could accelerate the consumer spending boom.
Investment bank Exotix said there could be measures “to renew the social contract” in the form of more state spending on welfare, infrastructure, defence and overseas aid.
Stocks benefiting from this would include consumer-oriented firms Jarir Marketing, United Electronics Co and Fawaz Alhokair Co, as well as banks such as Al Rajhi if they are permitted by regulators to loosen consumer credit, Exotix said.
However, out of those names, only United Electronics gained strongly on Monday, jumping 2.1 percent. — SG/Agencies
