Saudi Stock Exchange has a healthy IPO pipeline, says chief

On Tuesday, the TASI index closed at 7,924 points. (File/AFP)
Updated 04 September 2019

Saudi Stock Exchange has a healthy IPO pipeline, says chief

  • Khalid Al-Hussan says it is ready to launch Aramco whenever government gives go-ahead

DUBAI: The CEO of the Saudi Stock Exchange (Tadawul) said it has “a good pipeline” of initial public offerings (IPOs) in the coming months, and is ready to stage the biggest of them all, that of Saudi Aramco, whenever the government decides to launch it.

Speaking exclusively to Arab News as Tadawul marked its full inclusion in the MSCI index of emerging market (EM) bourses, Khalid Al-Hussan said: “Taking into account all the pressures that EM markets around the world are facing, we feel we’re in good shape, and we see a good pipeline of IPOs coming through.”

On the Aramco IPO, preparations for which have accelerated in recent weeks, he said: “We confirm our readiness for Aramco, but we’re still waiting for the final decision by the issuer. They’ll share with us the plan, but we’re still waiting for more clarity.”

Saudi Arabia's transport minister, Nabeel Al-Amudi, was appointed to the Aramco board, Saudi Press Agency reported on Tuesday. It followed the appointment of Yasir Al-Rumayyan, head of the Public Investment Fund, as chairman of the oil company.

News that the Kingdom was to be included this year in the MSCI index meant that many global institutions rushed to buy Saudi stocks, leading to an inflow of $18 billion to the Kingdom and a big jump in Tadawul, up as much as 19 percent earlier this year.

But the pace of foreign investment has fallen since investing institutions satisfied their requirements in Saudi markets, and the percentage increase for the year is now in low single digits. On Tuesday, the TASI index closed at 7,924 points, compared to 7,798 at the start of the year.



The Tadawul has attracted an inflow of $18 billion in foreign funds this year.

Tarek Fadlallah, CEO of Nomura Asset Management in the Middle East, said: “While Saudi Arabia’s inclusion in the global indices is positive, it provides no guarantees about the market’s performance in the future, and leaves it vulnerable to shifts in foreign investor sentiment.” Al-Hussan is determined to maintain the attraction of Tadawul for new foreign investors. “We started, with the beginning of our communication with international investors two years ago, to be visible and educate international investors about the market and what’s coming, and how do we handle their investments from a practice perspective.”

He added: “We gained the confidence of international investors through this, and through the MSCI inclusion. We continue that dialogue, both ourselves and Saudi corporates, in front of international investors through different channels, to educate them about changes and practices.”

Al-Hussan said: “We need to continue to enhance our offering activity, whether these are products or services we need to introduce and compete with other markets, as well as more companies. Certain investors invest in different sectors, so we continue to understand these types of investors and bring more diversified offerings to the market.”

Among these offerings will be new IPOs. “If you look at the IPOs that have come to the market this past year, I believe that their success was mainly focused on introducing new sectors. Our role is to continue that dialogue by opening more sectors to the market,” he said, hinting at new offerings by educational and service companies.

Both Tadawul and its regulator, the Capital Markets Authority, are studying applications from new issuers. “The readiness of an application differs from one issuer to another. Some are in advanced stages, some will need more time. But that gives us a good comfort level about the health of the pipeline,” Al-Hussan said, adding that he is happy with the level of retail investor involvement in the market. Some analysts have pointed to a decline in trading activity by non-institutional investors. “If you look at regional markets or EM liquidity over the last two years, we’ve seen strong pressure on liquidity in these markets. If you compare this liquidity in the Saudi market — we announce this liquidity every Sunday — I believe that we’re still at a good level,” he said, citing a daily average of $1 billion worth of shares traded.

“But of course we’ll continue to offer more products, more regulatory frameworks to continue to gauge that interest by retail investors, which is an important and positive element of our market liquidity.”

Group behind Facebook’s Libra coin announces 21 founding members

Updated 5 min 40 sec ago

Group behind Facebook’s Libra coin announces 21 founding members

  • Planned Libra global currency faces swelling criticism from regulators
  • Group of Seven warned it poses a threat to the global financial system
GENEVA: The Libra Association, created by Facebook to launch its new cryptocurrency, has announced its 21 founding members after defections by previous supporters including Visa and Mastercard.
The announcement on Monday came as the planned Libra global currency faces swelling criticism from regulators, and reported warnings from the Group of Seven that it poses a threat to the global financial system.
The group kicked off its first council meeting in Geneva and founding members including Uber, Spotify and Vodafone formally signed onto the Libra Charter, director general Bertrand Perez said.
“We now have a total guarantee of their involvement, so we have confidence in the project,” he said.
Last month, the non-profit association voiced hope that the number of companies backing it when it opened for business would swell from an initial 28 to “well over 100.”
But instead the list has shrunk, after more of its initial backers walked away amid swelling criticism from regulators around the world.
Credit card giants Visa and Mastercard, online marketplace eBay and digital payments firm Stripe each announced Friday they had changed their minds about being founding members of the association, following a similar recent announcement by digital payments firm PayPal.
The Libra Association confirmed Friday that the companies would no longer be founding members, but said it would continue building an alliance of businesses, social-good organizations, and others to implement the cryptocurrency.
Its launch was originally planned for mid-2020, but Perez said he had not ruled out a later start date.
“What we want is to build a platform that is solid, that is there to last and that will survive in the long term,” he said, adding he was still “optimistic” about reaching around 100 members as planned.
The membership departures came after US senators sent letters to several financial firms noting that they could face “a high level of scrutiny from regulators” if they participated in the new currency plan.
French economy and finance minister Bruno Le Maire had warned that under current circumstances, Libra posed a threat to the “monetary sovereignty” of governments and could not be authorized in Europe.
Facebook executives have, however, claimed the new digital coin could help lower costs for global money transfers and help those without access to the banking system.
Facebook chief Mark Zuckerberg is set to testify at an October 23 hearing in the US House of Representatives on the Libra plan.
But in a fresh blow, a draft G7 report has outlined nine major risks posed by such digital currencies, according to the BBC.
The report, due to be presented to finance ministers at International Monetary Fund’s annual meeting this week, did not single out Libra but referred to “global stablecoins” with the potential to “scale rapidly” as posing a range of potential problems.
Stablecoins are seen as more steady than cryptocurrencies like Bitcoin, since they are pegged to traditional currencies such as the US dollar or the euro.
But the G7 draft report reportedly cautioned that such currencies could pose problems for policymakers setting interest rates, and could threaten financial stability if users suddenly suffer “loss of confidence” in the digital unit.
Randal Quarles, the head of the Financial Stability Board (FSB), which oversees regulation among G20 economies, also sent a letter to G20 finance ministers Sunday warning that “global stablecoins could pose a host of challenges to the regulatory community.”
This, he wrote, was “not least because they have the potential to become systemically important, including through the substitution of domestic currencies.”
“Stablecoin projects of potentially global reach and magnitude must meet the highest regulatory standards and be subject to prudential supervision and oversight,” he insisted.