JEDDAH, 21 December 2004 — Shares of Ettihad Etisalat, Saudi Arabia’s second mobile phone operator, started trading on the Kingdom’s stock exchange at SR300 ($80) yesterday, six times their subscription price of SR50.
Dr. Said Al-Shaikh, chief economist at the National Commercial Bank, said: “It’s not surprising that the shares began trading at this price. It could rise to between SR400 and SR500 over the next few months.”
Al-Shaikh said the starting price showed there was great demand for stocks in the Kingdom. The company’s stock was 50 times oversubscribed when it floated 20 million shares in November.
Dr. Abdulwahab S. Abu Dahesh, vice president and head of Investment Research at Riyad Bank told Arab News that “the SR300 price for Etisalat shares is a reflection of supply and demand in the market.”
Samba Financial Group Chief Economist Brad Bourland said: “The high price for Etisalat shares reflects continuous optimism about the market and the economy. It shows there is ample liquidity available to fuel growth in the Kingdom.”
Meanwhile, seven million shares of the National Company for Cooperative Insurance (NCCI), representing 70 percent of state-owned shares in the firm, will start being floated for the public today.
Finance Minister Dr. Ibrahim Al-Assaf had announced earlier that an agreement had been reached with the Capital Market Authority (CMA) to start NCCI’s initial public offering (IPO) today.
The shares on sale include all the shares or 50 percent of the company’s capital owned by the Public Investment Fund as well as 20 percent of the capital owned by the General Organization for Social Insurance and Pensions Fund. The two organizations would retain 15 percent each of their stake in the company.
NCCI officials said they expect a rush by subscribers to buy the company shares. Pensions Fund Governor Muhammad Al-Kharashi described the flotation as a positive step that would help motivate investment and expand the privatization base.
Citizens as well as companies from the other Gulf Cooperation Council (GCC) countries would not be allowed to own NCCI shares or trade in the company shares. This means the law applying for banks which bars GCC citizens from trading in bank shares would also apply to insurance firms.
NCCI shares will be sold for SR205 each when subscription opens today. The market expects the offer to be 30 times oversubscribed, Al-Eqtisadiah newspaper reported.
Abu Dahesh said: “NCCI issue will be oversubscribed by about 25 times because seven million shares are offered and there is no ceiling. People will have less desire compared to Etisalat shares where there was a limit.”
Bourland said that the firms entering the market are of high quality such as Etisalat and NCCI, so there will always be demand for such shares.
Thousands of Saudi investors would be able to register their details through the Internet at a site designed by HSBC group and the Saudi British Bank (SABB) which would manage the NCCI flotation.
For the first time in the Kingdom, SABB launched a website (www.ektetab.com) for online self-registration.
“The effort is to provide latest banking technologies that contribute to the development of banking services offered by SABB in particular, and the Saudi banking sector in general,” the bank’s Deputy Managing Director Sulaiman Al-Hamdan told Arab News, adding that this new step would facilitate the registration procedures and loading of investors’ personal details.
Al-Hamdan pointed out that the website will be available for all local banks and their customers so that applicants can complete the application forms from the convenience of their homes through the websites of the receiving banks or NCCI site on the Internet.
The website, he said, will also provide useful information on how to complete the form, terms and conditions of the IPO and frequently asked questions (FAQ). The site will not be restricted to NCCI IPO self-registration only; investors can also register through this site for any future IPOs managed by the SABB.
