JEDDAH: The Capital Market Authority (CMA), the Saudi stock market regulator, has decided to allow authorized persons to enter into swap agreements with non-resident foreign investors, whether institutions or individuals, to transfer the economic benefits of the Saudi companies’ shares listed on the Tadawul. Authorized persons retain the legal ownership of the shares in accordance with conditions and requirements stated in the board resolution, the CMA said in a statement on the bourse website.
The new announcement comes less than a week after Tadawul began naming investors with stakes of 5 percent or more to boost transparency.
“The new swap rules are the closet way to allow foreigners to invest in stocks traded in the Saudi market. Swapping is not more than the purchase of a local stock by Saudi licensed intermediaries or simply stock brokers. The local brokers or intermediaries will act as facilitators for international investors without incurring any balance sheet costs. The economic cost of holding stocks will fall on the foreign investor,” John Sfakianakis, chief economist of SABB (The Saudi British Bank), said.
He said these new rules should be defined clearly in the next few days particularly on the extent and degree of foreign ownership of a stock. This move can be interpreted as a way of testing the interest of foreign investors in the Saudi market but it’s also a way to formalize and institutionalize the purchase of stocks by foreign parties, in a market that has seen foreign buying in a less institutionalized way.
“For a long time the issue of foreign participation in the local stock market was a matter of great debate inside and outside the Kingdom. Now it’s time to see how foreign investors will react to valuations,” Sfakianakis added.
Commenting on the new development, Snehdeep Fulzele, head of research at the Riyadh-based Falcom Financial Services, said: “The CMA announced this decision after the market hours yesterday which is very appropriate timing for the spread of this vital initiative as the local market is closed on Thursdays and Fridays, whereas the foreign markets are open.”
He added “this dissemination of information will reach the international investors over the next two days and everybody will be ready when the market reopens on Saturday. This measure will boost the sentiments of the Saudi bourse ... the volatility will reduce over a period of time.”
The CMA also announced the new listing rules yesterday. For companies whose fiscal interim periods end on Sept. 30, the restriction period starts on Sept. 9 and for the companies whose fiscal interim periods end on Oct. 31, the restriction period starts on Oct. 18 and ends on the date of publishing the announcement of the company’s interim results.
The CMA said for companies that follow the Hijra calendar and whose fiscal interim periods end on 30/09/1429 H corresponding Sept. 30, the restriction period starts on 09/09/1429 H corresponding to Sept. 9 and for companies whose fiscal interim periods end on 29/10/1429 H corresponding to Oct. 29, the restriction period starts on 18/10/1429 H corresponding to Oct. 18 and ends on the date of publishing the announcement of the company’s interim results.
The Saudi stock market surged yesterday. Chemical stocks powered the Tadawul All-Share Index (TASI) 44.74 points higher to 8,463.71.
Rabigh Refining and Petrochemical Co. shares jumped by 5.31 percent to SR54.50, Saudi Arabia Fertilizers Co. by 2.89 percent to SR213, Yanbu National Petrochemical Co. by 2.88 percent to SR53.50 and Saudi Basic Industries Corp. (SABIC) by 1.62 percent to SR125.
In the telecom sector, shares of Saudi Telecom Co. (STC) increased slightly to SR66.50, while Zain KSA shares declined 1.07 percent to SR23.
Shares in the newly listed Astra Industrial Group fell 0.56 percent to SR44.25.
The stock market turnover was over SR3.8 billion yesterday.
BMG turnover falls
For the fourth trading session this week, the BMG Saudi Index increased 1.0 percent to reach a closing level at 458.88 points yesterday. However, the total turnover went down by 16.5 percent to SR1.6 billion ($437 million) versus SR2 billion ($523 million) registered on Tuesday.
Two sectors witnessed gains, whereas three declined. For the second day in a row the industrial sector witnessed an increase, appreciating by 1.5 percent, while the banking sector went up by 0.8 percent. However, the insurance and services sectors each decreased by 0.1 percent and the telecommunications sector declined by 0.5 percent.
Fifteen shares went up, while 10 went down, and five remained the same.
