However, the CMA chief ruled out the possibility of opening the capital market for large-scale foreign investment, saying it would lead to the entry of hot money, leaving a negative impact on the market.
Analysts believe that the new fund would mark a gradual but clear step toward opening the Saudi market to foreign investments. Foreigners are currently able to invest in the exchange through swap agreements, but are barred from direct ownership.
Al-Tuwaijri said many major foreign companies have expressed their desire to invest in the Saudi bourse directly. "The CMA is studying plans to allow these companies to invest in the market directly in an organized manner, preserving the market condition," he said, adding that it would boost liquidity.
The Tadawul All-Share index (TASI) reacted positively to Al-Tuwaijri's remarks. The index reached a fresh 17-month closing high to close at 6,603.41, up 19.63 points or 0.3 percent on Sunday.
Sector losses were in the Multi-Investment, Cement, Retail and Agriculture & Food Industries sectors of 0.01 percent, 0.11 percent, 0.24 percent and 0.40 percent respectively. Sector gains ranged from 0.07 percent in the Insurance sector to a gain of 1.70 percent in the Transport sector. Overall market breadth was still positive with 81 advancers and 36 decliners registering an AD ratio of 2.25, the Jeddah-based Financial Transaction House (FTH) said in its daily market commentary.
Saudi Basic Industries Corp. (SABIC) kept upward momentum and closed 0.54 percent higher at SR93.50.
The value of traded shares reached SR3.45 billion on Sunday.
Commenting about the current status of the Saudi stock market, the National Commercial Bank (NCB) said in its weekly report on Sunday that all indications suggest that the Saudi market is heading for smooth sailing in 2010. Domestic corporate earnings are a big supportive variable and the prospects of global recovery are more apparent now than before, the NCB report said.
The TASI increased 1.4 percent last week due to higher trading volumes and improved earnings prospects. With the combined market capitalization of 138 listed firms at SR1.29 trillion and total net income of SR58.1 billion in 2009, investors were bidding stocks at an attractive 17.94 earnings multiple (PE) last week on expectations of yet another positive earnings outcome for the first quarter of 2010, the report added.
Dar Al-Arkan Real Estate Development Co.'s repayment of its sukuk worth SR2.25 billion, which was due on March 7, indicates the firm's financials are sound and it is operating in a viable economic environment. These factors suggest that the outlook for the Saudi equity market is positive, the NCB report added. Dar Al-Arkan shares surged 1.11 percent to close at SR13.70 on Sunday.
Meanwhile, the CMA Board of Commissioners announced its decision on Sunday to revoke the license granted to Ernst & Young Saudi Arabia Consulting Limited for violations of the Capital Market Law.
The CMA had authorized Ernst & Young Saudi Arabia to conduct arranging and advising activities in the securities business on May 20, 2006.
