JEDDAH: The Saudi stock market (Tadawul) announced yesterday that it would launch the new Sukuk and bonds market on Saturday, June 13. Tadawul said that it had completed all preparations and tests successfully with all market members. The new market provides many services such as listing, order submission, trade execution, clearing & settlement, and prices information dissemination.
The market will enable investors to diversify their investments by buying and selling Sukuk and bonds through existing brokerage firms, and by using the same portfolio that is used for trading securities.
The Capital Market Authority (CMA) announced earlier this week that it would set up a market for debt securities as part of its efforts to boost the Kingdom’s financial markets.
“The opening up of the local bond market is a boon for the economy that paves the way to making the capital market more efficient and mature. Bonds provide stable long-term financing for companies and states alike and offer investors an important alternative to stocks which are more volatile,” John Sfakianakis, chief economist at SABB, said.
He said corporations would be given an option to diversify their access to financing and not just rely on bank financing. Over-reliance on the banking sector for financing could lead to balance sheet mismatches and over-exposure.
“Saudi companies need to tap into the bond market to expand their operations going forward as banks can’t be the sole of financing for everyone and everything,” Sfakianakis added.
Echoing Sfakianakis remarks, Howard Handy, chief economist at Samba Financial Group, said: “Definitely this is a very important development. This will provide opportunities for institutions to access longer term funding through the capital market.”
He added: “At the moment, longer term financing is limited. The launch of Sukuk and bonds market will help in broadening and deepening the capital market.”
The trading hours for the Sukuk and bonds market will be from 11:30 a.m. until 3:00 p.m. and the settlement cycle will be T+2 (2 business days).
Meanwhile, the stock market dropped sharply yesterday. The Tadawul All-Share Index (TASI) plunged 2.19 percent, its largest decline in nine sessions as it again failed to hold above the psychologically important 6,000-point level. The index closed at 5,877.99, down 131.32 points. There were losses across all sectors yesterday, except the Multi-Investment sector, which was up 0.16 percent. Sector losses were in a range from 0.58 percent in Energy & Utilities to 3.58 percent for Building & Construction. Overall market breadth was strongly negative, with only 6 advancers and 118 decliners, giving an AD ratio of 0.05.
“The losses came at no surprise as the market has (in the recent past) shown technical signs of being exhausted and this was the main technical reason of its inability to conquer and maintain a close above 6100, which is the highest level reached (recently) on a closing basis,” Faisal Alsayrafi, managing director and CEO of the Jeddah-based Financial Transaction House (FTH), said.
“We continue our cautious view with an eye watching SABIC’s (Saudi Basic Industries Corp.’s) moves in the coming days, as any close below the 69 areas could open the door wider for deeper potential losses on the market,” Alsayrafi said.
SABIC shares fell 3.45 percent to SR70 yesterday.
Kingdom Holding Co. was the top gainer yesterday as its shares jumped 5.77 percent to close at SR5.50. Shares in Arabia Insurance Cooperative Co. plunged 9.12 percent to SR27.90.
The stock market turnover was over SR7.11 billion yesterday.
The CMA announced yesterday its approval for Altawfeek Financial Group to offer Dyari Real Estate Fund.
