JEDDAH, 28 October 2006 — The stock market is trading under new hours for the first time today. While many experts approve the decision to change trading hours from the previous two-session to a single-session now, small traders see the change as a move to push them out of the market.
Earlier this month, the Capital Market Authority (CMA) announced that starting Oct. 28, 2006, the Tadawul would trade for a single session starting at 11 a.m. and finishing at 3.30 p.m. from Saturday to Wednesday. The new timings would replace the previous morning and afternoon sessions. According to the CMA announcement, as posted on its website, the decision was made after noticing the unsuitability of having two sessions of trading and the effect that has on organizing work at the market in addition to being incongruent with what is followed in international markets.
Banks have also received direction from the Saudi Arabian Monetary Agency to change their stock trading halls’ working hours from 9 a.m. to 5 p.m. starting today. The banks’ regular branch service working hours will remain as they are operating under the morning and evening sessions.
Experts applauded the change made by the CMA in making the trading hours one session rather than the two sessions that have been followed since the Tadawul’s establishment in the eighties.
“I think it will have a positive impact,” said Dr. Said Al-Shaikh, chief economist at the NCB. He explained that in the previous two-session system, there were two different groups of traders, the professionals who came in the morning and the public and private sector employees who came in the afternoon.
“With the one session system, they all come together which allows for the market participants to play their game at the same time. The momentum will be carried out in one session instead of having a rumor appearing during the interval and changing the trend. The one-session system also allows enough time for investors to absorb news, such as corporate announcements and regulatory announcements that are made in the morning, to make their investment decisions,” elaborated Al-Shaikh.
However, he did admit that the new hours could cause inconvenience to those employees who used to come to the trading halls in the afternoon but that could be easily compensated with the increase in traders using the Internet. Furthermore, maybe this change will persuade investors, especially small investors, to rely on professional institutions and fund managers.
That is not how some investors see it. “This will only push us small investors out of the market because the hours are unsuitable for us, it doesn’t give us much time to trade,” said teacher Mohammed Abdullah. “I don’t mind the single session but why didn’t they choose a more convenient trading session, for example 12 noon to 4 p.m. or 4 p.m. to 8 p.m. so that everyone can benefit. Besides, with most of the small investors pushed out of the market, wouldn’t that affect the liquidity of the market?” he added.
