RIYADH, 21 April 2005 — A suggestion to split shares and expand the capital market base was made at the start of the first Saudi Capital Market Forum that opened here yesterday.
Former Minister of Finance and National Economy Muhammed Abalkhail inaugurated the forum which discussed various issues in the light of reforms in the capital market. The forum has been jointly organized by the Consulting Center for Finance and Investment (CCFI) and National Vision Co.
The forum came against the background of capital market boom in the Kingdom where market liquidity as measured by turnover ratio improved from 47.6 percent in 2002 to 154.4 percent last year. The number of transactions increased from 1.03 million in 2002 to 13.2 million during the same period. Market capitalization jumped from SR280.7 billion to SR1.48 trillion.
Speaking on the occasion, Dr. Abdul Aziz Al-Dukheil, president of CCFI, floated the idea of splitting the share value from the current price of SR50 per share for premium stocks to SR10 each to make them easily available to small investors. This would expand the shareholders’ base and benefit the small and medium investors.
Dr. Al-Dukheil said it was also necessary to throw open the stock market to expatriates as part of the reforms process that has already brought in the GCC nationals as shareholders in the banking sector, hitherto closed to them. He also stressed the need for greater transparency in the capital market by obliging the companies to publish their annual reports regularly. Dr. Al-Dukheil cited cases in which some companies had not brought out their annual reports for one year or more. At a time when the market was moving toward the conversion of family enterprises into joint stock companies, withholding information on their companies would not serve the public interest, he observed.
Earlier, Abalkhail referred to some of the issues facing the capital market. He cited in particular the conflict of authority between the Ministry of Commerce and Industry and the Capital Market Authority. He hoped that a clear-cut demarcation of authority would put an end to the confusion.
Other speakers included Dr. Fahad S. Al-Sultan, secretary-general of the Council of Saudi Chambers of Commerce and Industry, Khalid A. Almelhem, president of Saudi Telecom, Abdulhadi Al-Shayif, general manager and member of the board of directors of National Commercial Bank, and Dr. Sulaiman Al-Sakran, associate professor in fiscal sciences, King Fahd University of Petroleum and Minerals.