Open the Saudi stock market to foreign investors for the first time.

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2GMT 16:00 2014 Althelaúa July 22 : Last Update

Open the Saudi stock market to foreign investors

 

Saudi government announced the opening of the stock market to foreign investors for the first time.

Riyadh: The announcement of the decision, which will come into force in the first half of next year, 2015, the index to rise by 3 percent of trading in exchanges 

Early, as the Saudi market index jumped at the opening 1.44%, or 140 points, to the level of 9895.5 points.

 

The Saudi stock market is the largest market in the Middle East and the second worldwide (after the Chinese market), which is still closed to foreign direct investment.

 

The move is part of efforts by Saudi Arabia to break the adoption of macro-economy of the country's oil wealth.

 

Analysts expect that the decision raises significant interest from investors who want to invest their money in the biggest companies in the Middle East, Saudi Arabia's economy, which is forecast that it will grow more than 4 percent this year.

 

Experts say that the new move will benefit the country as Saudi Arabia will become a kiss of senior international investors.

 

[moneysoon]

STRATEGIC MOVE!!!!!!!!!!!! JUST THINK OF THE IMPLICATIONS

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Large reserves and high oil prices encouraged the decision-making                                                                                                                                      Experts: open the Saudi stock market to foreigners is a positive step increase its attractiveness

 

 

     

Screen investor reads stock trading in the Saudi capital Riyadh (Reuters)

Date Published: Saturday, July 26th, 2014

The decision to open the Saudi stock market in front of foreign direct investment, in a series of economic reforms accelerated in recent years, and began to reap the benefits, but remains cut energy subsidies, the biggest challenge in front of the largest oil exporter in the world.

Over the last four decades, the largest Arab economy suffered a number of problems, most notably high unemployment, lack of housing and health care.

Still Kingdom's economy depends mainly on oil, which makes it vulnerable to any sharp fluctuations in the prices of international crude.

 

 

 

The decision to open the Saudi stock market in excess of $ 531 billion dollars, part of plans to diversify the economy, followed by a number of other reforms in the labor market, and in the housing sector over the past three years.

 

And helped social tensions witnessed by the Middle East since the beginning of the year 2011, to accelerate the pace of reforms, and reinforced the need to create more jobs, and to provide housing for the citizens, to improve social conditions.

Stimuli open market

There are risks related to economic reform, for example, may lead to open the market to foreigners, to destabilize the financial system, with the influx of foreign money, and perhaps raises the criticism that foreigners benefit from the market at the expense of citizens.

Therefore, the government postponed opening the stock market for years, and is likely to give regulators the Saudi investment licenses gradually to avoid destabilizing the market.

But it seems that the Saudi authorities now see that it can not wait for the reforms more than that, especially since the rise in oil prices provides ample room, and an opportunity to reform Tiiv decisions that may become more difficult later if circumstances changed.

He said Saudi economist Abdulwahab Abu Dahesh, the formation of large reserves, and the continued rise in oil prices gave the Kingdom a catalyst to start the reform, also helped the events taking place in the Arab world to hasten reform.

He added: «political turmoil around us helped raise wages, and labor market reform and the allocation of 250 billion riyals (67 billion dollars) for housing and hasten the issuance of the mortgage law, and all of these reforms came in the midst of the events in the Arab world».

He continued, saying that the passage of time has been able Kingdom to focus on specific sectors, such as employment, housing, primarily, and the reforms began to bear fruit as expected to continue the government's efforts at reform during the next five years, with the vast wealth of existing and forecast oil prices remain above $ 100.

Showed the Saudi government since 2011 its willingness to endure some temporary imbalances that may be taking place in the economy, in order to seek to implement long-term reforms.

The Ministry of Labor imposed late 2011 tougher sanctions on companies that do not adhere to quotas employment of nationals, and in 2012 the ministry imposed a fee on companies of 2400 riyals for each foreign worker more than the number of workers from Saudi citizens.

Despite the growth in demand for business in light of the economic boom and government spending generously on infrastructure projects, said companies in the private sector, especially those working in the sectors depend heavily on employment, the labor market reforms have led to stalled projects, and impacted negatively on earnings, and made labor-saving cheap is more difficulty in.

He left the UK about one million foreign arrivals, who were working in violation of labor laws, after a campaign launched by the ministry on violators.

In recent months began to reflect the impact of these reforms on the overall economy, which has slowed the growth of non-oil sector to 4.4% on an annual basis in the first quarter of this year, marking the slowest pace in at least ten years, compared with 6.2% in the previous quarter.

The authorities have responded to pressure from the business community, in order to ease the pace of reforms and see the positive effects that outweigh the cost of temporary, as in the long term you will be able to set more citizens in the private sector, and the reduction of workers' remittances inflows of cash, estimated at billions of dollars annually.

Economic reforms Among other reforms, approved the Kingdom in 2011, the mortgage law after waiting for decades, to help solve the problem of housing shortage, also seeks to liberalize the civil aviation sector, and the development of services and allowing airlines from the private sector to enter the market, although that may occur under pressure on the airline's main Saudi Arabian Airlines.

And the opening of the Saudi market for foreigners is a step in the same direction, motive behind it is not about factors financial, as exceeding the market value of the Saudi stock market value of the markets of Egypt, the UAE and Qatar combined, and therefore does not need the liquidity of foreign, but authorities are seeking from behind the move, to achieve more efficiency and effectiveness in the market, particularly with regard to corporate governance, and help a larger number of companies to emerge from the local to the global level, and to encourage family businesses, which controls a large part of the non-oil sector to enter the market.

Fahd said the Turkish head of research at the feasibility of the investment company, said that one of the major challenges in front of family businesses, sustainability is the passage of time and the succession of generations, and the listing on the stock market, that helps companies achieve stability and sustainability.

Power support

A lot of the problems surrounding the pace of reform in the Kingdom, the most important bureaucratic and political sensitivity of the reforms.

.

For example, probably does not bring the mortgage law impact Hopefully, if you fail the competent courts in the application, and if he refuses to land owners wealthy sell some of their properties on the market, but there are signs of some success, during the last year have increased the contribution of non-oil sector in GDP real to 78.7%, the highest level since at least 1970, compared with 62.9% in 1998.

Though not approaching the authorities after one of the biggest challenges in a series of reforms, which cut energy subsidies, which accounts for the tremendous large part of the budget, and it makes the price of fuel for consumers and industry within the cheapest in the world.

According to the International Monetary Fund, said that the Kingdom may be recorded in the budget deficit by 2018, if spending continued to pace herself.

The importance of reducing energy subsidies, in that it will enable the Kingdom to reduce oil consumption locally, and should prevent the possibility of reducing the level of exports in the future.

Saudi economy and occupies position No. 19 among the largest economies in the world, though the kingdom comes in ranked sixth in the world among the largest oil-consuming countries, according to the reports to my company.

BP, Saudi consumed more than a quarter of its oil production over the past year.

He ruled Abu Dahesh move forward in reducing the near-term support, and said: «I expect to continue to support energy and electricity, while the alternatives, whether quoting years, or alternative energy, or more efficient use of energy».

He pointed out that the government spends more than $ 100 billion on renewable energy, along with billions of dollars spent on increasing the efficiency of energy use, and make substantial restructuring of the energy sector.

And that the outlook for shale gas production in the United States, Saudi Arabia has granted more leeway because justify increased spending in the local economy, as it will not be able to supply the global economy, including availability now.

(Riyadh - Reuters)

[yota691]

Tuesday 2 November 1435 e - July 29, 2014 AD - No. 16836, page number (30)

Article

Saudi Capital Market to the World

D. Fahd bin Juma

    Rejoiced traders in the stock market with the approval of the Council of Ministers on the establishment of the Capital Market Authority to open investment for foreign financial institutions qualifying for the trading of shares of the financial market, according to would put the body of the regulations in preparation for entering the market in the first half of 2015, where the index jumped year with the emergence of the news in 21 July (9.75) A point to (10.02) thousand points and liquidity of 5.4 billion to 12.24 billion riyals respectively, to settle down after that at 10 200 points and less liquidity at 8.8 billion rials is expected to stabilize at this level. It also focuses buying in sectors of top quality investment and potential foreign investor willingness to buy, such as: banking and financial services, petrochemical industries, and communications.

There is no doubt that the opening of the market to foreign investors has many positives, if they knew how the Capital Market Authority administered formulation of regulations and monitoring of the market to fill the gaps likely to disfigure or impair his performance. It is expected entry of foreign liquidity, including an initial rate of 6% of the capital value of the daily market on the basis of the size of the current foreign investment exchanges and market data, which will give him some sort of momentum.As well as the high efficiency of the financial market a high level of transparency and disclosure, which will pave the Saudi market to join the Emerging Markets Index (MSCI) future. The likely focus of these investments in growth companies and good financial returns, while most of the trading will be limited to individuals to buy and sell shares of companies with the most volatile prices with a view to speculation.

Foreign investors have sufficient information about the market, but they are focusing on the laws and regulations that protect their investments and avoid them during the high risk of the stability of economic and financial system and the support of the entire financial services to support their investments and increase the attractiveness of the market for them.

Unfortunately that some magnifies the risk of entry of foreign investment into Saudi financial market and compares it to what happened in Dubai and remind them that the financial meltdown in which he was the world, and Dubai in 2008, Saudi Arabia has not been exposed, but it continued its expansionary fiscal policy. Saudi Arabia has the capabilities and expertise learned from what happened both in neighboring markets or the world, enabling them to avoid any risk to the capital market as a result of his meeting with foreign investment, institutional (not individual) from the funds of a hot short-term investments by following the mechanical balance of the market and the issuance of new decisions when needed.

I've explained (Gert Beckart) and his companions in their (the volatility of growth and financial liberalization) in the Journal of Monetary and Capital International in 2006, many of the countries concerned to open their financial markets local to foreign investors for fear of exposure to fluctuations in the global economy what drives these investors to speed up the earning daily and exit sudden and swift from the market, leaving devastation to the local economy. But (Gert) found that the opening up of financial markets has no effect on economic fluctuations, because it expands the scope of risk and makes things quieter than it was before liberation. He stressed that their research does not support say that the liberalization of capital markets will lead to excessive volatility, and found no evidence that the opening of financial markets to foreigners, followed by destabilization of the domestic capital markets, where he found that 26 of the 40 countries have removed restrictions on the governor foreign investment and has seen a decline in the volatility of their markets. It also saw the countries that opened stock markets and capital account together and allowed the free movement of money in and out of the country at any time, the largest decline in volatility, their analysis has included the collapse of the markets, Chile and Asian countries in 1998.

But found other factors that could spark volatility with market liberalization, if the economy was fragile, with the low quality of financial institutions. The advantage of the positive benefits of the liberalization of financial markets are closely linked to the overall quality of government institutions and financial markets.

 

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THANKS

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Saudi market, advancing 4 centers in two months occupies No. 20 in the world in terms of market value

 

September 8, 2014 20:29   Last Updated: September 9, 2014 10:22 Source: Private direct

 

 

 

 

Managed the Saudi market to make significant progress during the past period, especially since the announcement of the order to enter the foreign market, which has been able to advance in four centers in the world, during the nearly two months, reaching the market value of the Saudi market to 2.1 trillion riyals (560 billion dollars) by the end of July to a rise of 7.97% reported at the end of last June amounted wearer 1.94 trillion riyals (518.6 billion dollars), to lead it from the center 24 of the world to the center 22, and then the end of trading on September 7 and arrived at the market value of the Saudi market to 2.26 trillion riyals (603.96 billion dollars) to check her second jump, a rise of 7.62% to reach the center of the 20 outperforming the markets, such as the Malaysian market and the South African market, according to statistics for "direct information" and recent data for Bloomberg.

And acquires the Saudi market so the 0.91% of the total market value of the financial markets around the world, amounting to 66.45 trillion dollars.

 

The markets remained America ranked first in the world with a market capitalization amounted to 23.9 trillion dollars, capturing accounted for 35.98% of the total market value of the world's markets, and come in second place Japan's stock to 4.64 trillion dollars and 6.99% of total market capitalization, and third place British market b 3.98 trillion dollars and 6% of the total market value of the world's markets.

At the level of the region remained Turkey Mhakza the level at the center of the 30 and a market value of $ 264.6 billion, up from 228.6 billion dollars by the end of July and 222.88 billion dollars by the end of last June.

At the level of the Arab markets retreating markets Alamartah of ranked 31 by the end of July to Grade 33 and on 7 September in market value amounted to 236.7 billion dollars, also fell Qatari market two places to 36 and a value of 202.9 billion dollars while she was at the center of the 34 by the end of last July, and came Kuwait at the center of the 41, while Egypt came in 46th place in the center of Morocco and 52 in the world.

 

The information "directly" has monitored the achievement of investors in the Saudi market in the first eight months of the current year gains market amounted to 134.74 billion dollars , equivalent to the market value of seven Arab markets a full end of August, which is (Bahrain, Casablanca, Beirut, Amman and Tunis, Damascus, and Palestine), where the value market capitalization of the seven combined at the end of August 134.22 billion against $ 134.74 billion dollars gains market capitalization of the Saudi market, but that this value is greater than the market value of seven Arab markets and by 25% and the markets of the seven in question is the market earlier with the replacement market Casablanca market Muscat, then a market value for the seven markets, only $ 107.8 billion.

And increase market gains to the Saudi market in eight months on the market value of the group market of Egypt and Casablanca where worth a combined market capitalization of $ 129.66 billion, which can be achieved, including Saudi investors from market gains in the first eight months to buy the full markets and more.