Saudi-based analysts said the National Commercial Bank (NCB) shares, which started trading Wednesday on Tadawul, will witness a gradual increase in the weeks ahead after surging 10 percent to the maximum one day limit.

The NCB shares closed at SR49.50 from the offer price of SR45.

The Tadawul All-Share Index (TASI) closed slightly down at 9,766.01. The value of traded shares exceeded SR7 billion on Wednesday.

John Sfakianakis of Ashmore Group told Arab News: “Today (Wednesday) we saw the debut of NCB and the stock was not disappointing as expected.”

He added: “NCB shares hit the limit up at the open. There is a massive interest from foreign international institutions and regional players, and this appetite is expected to continue.”

He said: “The rest of the market was flat as it continued to trade below average volumes. The market is upward biased as upside risks are building up, which should help the momentum.”

NCB Chairman Mansour Al-Maiman expressed his extreme happiness over the results of the IPO, which closed on Nov. 2.

The percentage of the final coverage of the IPO in NCB’s shares offered to Saudi subscribers reached 2,301 percent, while the number of individual subscribers reached 1.25 million.

Investors have pumped SR310.7 billion to subscribe to 300 million shares allocated to individual subscribers, which is equivalent to 15 percent of the total capital of the bank at a price of SR45 per share.

Al-Maiman thanked Custodian of the Two Holy Mosques King Abdullah for the support offered by his government and related agencies.

He thanked the Ministry of Finance, the Ministry of Trade and Industry, the Saudi Arabian Monetary Agency, the Capital Market Authority, the stock exchange (Tadawul), and GIB Capital and HSBC Saudi Arabia, the joint financial advisers and lead managers, for facilitating the NCB’s IPO.

Basil Al-Ghalayini, CEO of BMG Financial Group, said: “I believe NCB’s stock price will witness a gradual increase in the weeks ahead at least to, what analysts view, its fair value of SR70. It will definitely be a strong addition to the financial sector weighting and will be one of the stocks attractive to the international financial institutions once the market opens for them.”

Al-Ghalayini added: “The index will be positively impacted over the long term as this bank is the oldest one in the country and the largest one in the entire region with healthy and sound financials, and its declared plans for complete Shariah-compliance conversion in the short term.”

Asim Bukhtiar, vice president and head of research at Riyad Capital, said: “Bid interest on NCB was strong today suggesting that the stock has plenty of upside. Shares should settle in the SR80 to SR85 range.”

However, he said: “Once the initial euphoria subsides, the question uppermost will be whether investors will reinvest their NCB gains back in the market. If this occurs then the overall index should rise with a broad-based rally. Otherwise the gains may be used for debt servicing or other discretionary spend.”

Waleed Al-Bawardi, director of cash and markets at Tadawul, said, “By the end of last month (October), the Saudi market value exceeded SR2 trillion. As for the performance of the index from the beginning of the year to the current date, it has achieved an increase of 17.57 percent,” he added.

At the sectoral level, he said the value of traded stocks for the banking sector in the same period reached 11.4 percent of the total trading value, which came as the third best performing sector after petrochemicals and insurance.”

As for the market value, Al-Bawardi said the banking sector, the second largest after the petrochemical sector, accounted for 22.72 percent.

The addition of the NCB share Wednesday will certainly add more liquidity to both the sector and the market alike, he added.

“Accordingly, it is expected that the value of the Saudi market will increase by more than SR90 billion after the inclusion of the NCB shares in the market,” Al-Bawardi added. Securities and Investment Company (SICO) estimates a target-price of SR72 for the NCB share, indicating a 60 percent upside to the stock from its issue price of SR45.

“We remain optimistic on the NCB’s growth prospects, and expect the bank to capitalize on its strong footprint in the Kingdom and balance sheet strength, which will enable it to report robust earnings growth. We have also analyzed the bank’s valuation under a more favorable and an unfavorable economic scenario,” SICO said in its

report.