Abdul Rahman Al-Tuwaijri, chairman of the Capital Market Authority (CMA), has said that Saudi Arabia will soon allow foreigners to invest in its stocks and initial public offerings (IPOs).
Al-Tuwaijri said that the CMA would allow investment through domestic funds which will be established by licensed firms. SABB chief economist Dr. John Sfakianakis said, "This is an excellent step in line with the commitments of the Kingdom toward liberalizing its economy. The partial liberalization of the capital market is an essential component of the economy."
He added, "Markets which are the biggest in the Middle East have been expecting such a step forward. The opening up of the Saudi market will generate positive momentum for the rest of the region. Everyone in the region will benefit from the partial opening up of the Saudi market."
The stock market, however, reacted negatively after Al-Tuwaijri's announcement. The Tadawul All-Share Index (TASI), which passed the 10,000-point mark and closed at 10,108.55 on Saturday, dropped 76.85 points to 10,031.71 yesterday. The index is higher by 26.45 points so far this year after falling over 52 percent in 2006.
The stock market turnover was SR12 billion yesterday compared to SR15.27 billion on Saturday. Shares of Middle East Specialized Cables Co., which started trading for the first time on Saturday, declined 6.19 percent to SR83.75 yesterday.
Shares of Saudi Electricity Co. (SEC), which signed three contracts worth SR3.8 billion for the expansion of its Rabigh plant on Saturday, fell 1.72 percent to SR14.25 yesterday. In the telecom sector, shares of Saudi Telecom Co. (STC) and Etihad Etisalat (Mobily) edged lower by 2.25 percent and 0.35 percent, respectively. The Saudi Cabinet also approved recently the board of directors of the Saudi Stock Exchange (Tadawul) for a three-year term.