JEDDAH, 26 April 2007 — Standard & Poor’s, the international rating agency, has launched six Gulf stock indexes including S&P Saudi Shariah Index. The S&P index will carry 62.9 percent of companies listed on the Saudi bourse, informed sources said.
Mathew McAdam, head of communications at S&P, said the launching of indexes reflected the organization’s confidence in Gulf stock markets. “The move will also accelerate influx of foreign investors into the Kingdom,” he said.
Alka Banerjee, vice president of S&P for index services, said her organization recognizes the remarkable progress made by the Gulf stock markets during the past few years, especially in the area of transparency. This market is poised to become a major hub for international investors, she said.
Banerjee said the Shariah-based investment market has come of age. “We as the world’s largest exporter of indexes are ready to meet its requirements,” she said.
A council comprising of experts, including Islamic scholars, will monitor the companies listed on the bourse. It will not accept companies that do not comply with Shariah regulations. “We established Saudi Shariah index with our own efforts without receiving any support from the Saudi Capital Market Authority,” she pointed out.
Saudi Arabia was placed number one in the S&P Islamic Gulf index with the number of Shariah-compliant Saudi companies reaching 62.9 percent by the end of the first quarter of 2007. Kuwait was placed number two with 20.1 percent, according to Al-Eqtisadiah business daily.
In a related development, the International Finance Corporation (IFC), a member of the World Bank Group, said it was working with Saudi Arabian Monetary Agency (SAMA) to develop a stock market index including Saudi stocks. The new index will cover IFC’s financial markets in 32 countries.
IFC’s Executive Vice President Jannik Lindbaek gave this assurance following a meeting with Finance Minister Dr. Ibrahim Al-Assaf and SAMA Gov. Hamad Al-Sayari in Washington. He said the move would strengthen the Saudi stock market, the largest in the Middle East, with a capital of nearly $450 billion.
In a statement on the occasion, Al-Assaf emphasized the strength of Saudi economy, with surplus in current account and general budget. “We expect better performance in the years to come as a result of the strong growth of the private sector and scaling down of public debts,” the minister said.
He also spoke about the government’s efforts to stabilize Saudi riyal and its exchange rate against leading foreign currencies.
He said the Kingdom’s financial market is poised for an unprecedented growth with the licensing of new banks and financial mediation firms.
