Tadawul reforms: $50bn funds boost expected

Tadawul reforms: $50bn funds boost expected
Updated 15 August 2014

Tadawul reforms: $50bn funds boost expected

Tadawul reforms: $50bn funds boost expected

The recent decision by the Capital Market Authority to open the stock exchange is a game-changer for Saudi Arabia, a top economic analyst commented Thursday.
“The opening up of the market should positively impact the region as foreign investment is expected to rise,” John Sfakianakis, a Riyadh-based investment strategist, said.
His remarks came as a new study revealed that Tadawul witnessed three IPOs in Q2, 2014 by Umm Al-Qura Cement Company, Abdulmohsen AlHokair Group for Tourism and Development Co. and Al-Hammadi Company for Development and Investment raising $73 million (SR273.75 million), $220 million (SR825 million) and $168 million (SR630 million), respectively. The main Tadawul stock index has already jumped over 8 percent since the market opening plan was announced on July 22.
Steve Drake, head of PwC’s Capital Markets in the Middle East region, said: “Equity capital markets performance in the region in the H1 2014 improved considerably with a total of nine listings. Looking ahead, the remainder of 2014 looks very strong and we would expect to see this continue into 2015.”
In 2013, foreigners owned just 1.2 percent of the market via swaps, according to CMA data. The potential for their portion to rise is huge; if Saudi Arabia is added to global equity indexes, it may attract over $50 billion of fresh money from abroad in the coming years, fund managers estimated in a recent Reuters report.
Commenting further on recent market developments, Sfakianakis said: “The road to economic modernization is not an easy or a quick one but the opening up of the market is the most important following Saudi Arabia’s accession to the WTO in 2005.”
But he added: “It’s hard to tell where the market is headed from here but I do expect the positive climate to be more of dominant factor during the rest of the year.”