JEDDAH, 12 November 2006 — Shares in Saudi International Petrochemical Company (Sipchem), which started trading on the Tadawul yesterday, shocked the market by falling below their initial public offering (IPO) price of SR55. Sipchem is the largest private petrochemicals company in the Kingdom and one of the largest in the Middle East.
Despite it posting record third quarter profits of SR318 million, Sipchem shares closed 17.73 percent down at SR45.25. It is thought to be the first fall on debut in recent market history. Even with the market slide, the shares of all other companies that have come to the market in the past two years are still above their IPO price. Over SR1 billion worth of Sipchem shares, which are trading in the Industrial sector, changed hands yesterday.
The Saudi Capital Market Authority (CMA) has allowed Sipchem shares to trade in a special session from 4 p.m. to 6:30 p.m. from yesterday until Monday.
Dr. Abdul Rahman Al-Tuwaijery, chairman of CMA, said the stock market plunge did not reflect the Kingdom’s economy, which remains strong. Speaking to Al-Arabiya channel, he said the CMA would make every effort to protect the market and investors. “The authority is ready to listen to any proposal to strengthen the market.”
A Western analyst who has been keeping an eye on Sipchem’s progress said the downward movement was very surprising. “It says everything about lack of confidence in the stock market and nothing about Sipchem’s very strong fundamentals.” He added: “This is a company that is going to go far.”
Though Sipchem shares were trading after the regular stock market trading hours, the Tadawul All-Share Index (TASI) plunged another 408.15 points or 4.84 percent yesterday to 8,019.07 points.
