Saudi exchange boss sees more IPOs

Foreign investment is expected to flood into the market from 2019. (Reuters)
Updated 06 September 2018

Saudi exchange boss sees more IPOs

  • Authorities are working on several initiatives including a package of incentives for local companies to list
  • Launch of stock index futures should bring an influx of money from overseas

RIYADH: A package of incentives is to be offered to Saudi companies to list on the Riyadh-based stock market, with more initial public offerings (IPOs) expected next year, according to the CEO of the exchange. The Saudi Stock Exchange, known as Tadawul, expects IPOs to pick up next year, its chief Khalid Al-Hussan told Reuters, while the launch of stock index futures should bring an influx of money from overseas.
Al-Hussan said authorities were working on several initiatives including a package of incentives for local companies to list.
So far this year, the Tadawul — which has a capitalization of around $490 billion — has seen one IPO on the main market and one on the parallel Nomu market.
“The application pipeline of new listings, both in Nomu and the main market today, is very healthy,” Al-Hussan told Reuters.
He was speaking as the Tadawul announced the signing of an agreement with global index provider MSCI to jointly launch a tradable index later this year.
The move is set to serve as the basis for investment instruments including derivatives and exchange-traded funds (ETFs), executives said in Riyadh.
The index will be open to both domestic and international investors, and follows the announcement that the Tadawul is to be upgraded by MSCI to “emerging market” status, in a move tipped to see billions of dollars of foreign investment flood into the market from 2019.
“The joint tradable index will be available in the fourth quarter of 2018,” Al-Hussan told reporters.
“The establishment of this index provides a platform for the development of futures traded and other traded products, in the financial market.”
MSCI said that the index would be based on the broader MSCI Saudi Arabia index series, part of the MSCI Emerging Markets Index.
Tadawul said in a separate statement it would introduce exchange-traded derivatives in the first half of 2019, Reuters reported.
“The creation of the joint tradable index provides a strong foundation for the development of index futures and other exchange-traded products,” said Al-Hussan.
“As the Saudi market is fully integrated into global emerging market indices, including MSCI, the launch of an index will pave the way for ETFs and other products that enable investors to broaden exposure and diversify ... risk while enhancing the overall efficiency of the market.
“The creation of the joint tradable index will be a milestone for launch of financial products, while Tadawul aspires to achieve more.”
He also pointed to the development of the Saudi exchange ahead of an expected initial public offering in energy giant Saudi Aramco, which is set to be the world’s largest listing.
“I think the Saudi stock exchange will continue to develop its markets to be ready for Aramco and other issues,” Al-Hussan added.
Henry A. Fernandez, MSCI’s chairman and chief executive officer, said that Saudi Arabia had gone through a “remarkably rapid period of change” in the past few years.
The Tadawul and MSCI will be working closely in a “win-win” situation, he added.
“This joint index is possible as a result of the Kingdom’s adoption of international standards and desire to create additional investment opportunities for domestic and international investors,” said Fernandez.
“The jointly launched index is a result of the Saudi market applying international standards and desire to provide additional investment opportunities to investors.”
Fernandez added that the composition of new MSCI-Saudi tradable index is not yet fixed, but said that “the index provider will publish standards later.”
The news follows a string of reforms on the Saudi market, including the easing on restrictions on foreign ownership of companies.


UK retail sales shoot past pre-virus levels as shoppers migrate online

Supermarkets such as Sainsbury’s have avoided many of the problems plaguing the rest of the retail sector amid the coronavirus pandemic. (Reuters)
Updated 19 September 2020

UK retail sales shoot past pre-virus levels as shoppers migrate online

  • Britain suffered the biggest economic hit of any G7 economy between April and June, when output fell by more than 20 percent

LONDON: British shoppers continued to increase spending last month, taking sales further above pre-COVID levels, as strong online demand helped much of the sector enjoyed a faster rebound than the rest of the economy.
Retail sales volumes rose by 0.8 percent in August, the Office for National Statistics said — slightly above the average 0.7 percent forecast in a Reuters poll — and, compared with a year earlier, they were up 2.8 percent, just below forecasts of 3 percent annual growth.
British retail sales had already overtaken pre-COVID levels in July and now stand 4 percent higher than before the crisis.
However, the rebound masks a sharp split between online and high-street retailers, with online and mail order retailing up 34.4 percent on the year in August, while many traditional retailers outside the grocery sector have suffered reduced footfall.
“Clothing stores continued to struggle, with sales still well below their February level. Overall, the switch to greater online sales means the high street remains under pressure,” ONS deputy national statistician Jonathan Athow said.
The crisis in traditional retailing is having a knock-on effect for commercial landlords, with many stores closing and tenants such as clothing chain New Look seeking to renegotiate rents to link them to turnover.

FASTFACT

British retail sales now stand 4 percent higher than before the crisis.

Clothing sales rose by 13.5 percent on the month, but are still 15.5 percent down on the year.
Grocery sales rose just 0.4 percent in August, after strong growth in previous months when British people had eaten at home more.
August saw a temporary government promotion for dining in restaurants, named “Eat Out to Help Out,” which earlier industry data suggested had dented grocery demand.
The Bank of England (BoE) said on Thursday that Britain’s economy was on course to recover faster than it had forecast in August, but, even so, output in the July-September period is expected to be 7 percent lower than in the final quarter of last year.
Britain suffered the biggest economic hit of any G7 economy between April and June, when output fell by more than 20 percent.
The BoE identified consumer demand as one of the brighter spots, but said it was vulnerable to an upsurge in COVID-19 cases as well as an increase in unemployment when the government’s temporary job support program ends next month.