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| Arabia |
| Saudis to Privatize Bourse |
| 2006-05-11 |
| A new financial district will be constructed over an area of three million square meters in the north of Riyadh, making it the biggest project of its kind in the world, Finance Minister Ibrahim Al-Assaf announced yesterday. It was also announced that the Kingdom would go ahead with the privatization of the Saudi stock market as part of its economic reforms program designed to boost investment and create job opportunities. Reading out the speech of Custodian of the Two Holy Mosques King Abdullah, Al-Assaf said the King Abdullah Financial District would be the Middle EastÂ’s first financial district to match the major global trade zones. He was speaking at the start of the two-day Euromoney conference titled "Building the Future" attended by some 1,000 participants from over 40 countries. The event has been co-sponsored by the Capital Market Authority (CMA). Referring to the financial district, King Abdullah said it would house the stock exchange as well as banks, brokerage services and other financial institutions. The king said in his speech that the project is expected to take three years to complete. King Abdullah said the moves are part of the KingdomÂ’s measures to bring its economy in line with that of other advanced countries following its accession to the World Trade Organization. The ultimate objective of this gigantic exercise was to promote sustainable economic development and create job opportunities for Saudis. Elaborating on the kingÂ’s statement on King Abdullah Financial District, Jammaz Al-Suhaimi, chairman of CMA, said the state-of-the-art center would encompass not only offices that will house the large community of professionals working within the financial sector, but also conference facilities, retail and recreational space that could act as a focal point for the wider community. The King Abdullah District will also incorporate a financial academy, which will provide training and education for those wishing to enter the market. The center, he said, provides the next generation of development, underpinning Saudi ArabiaÂ’s place as the largest economy and financial market in the region. The CMA chief also unveiled plans to turn the stock market into a shareholding company. He said the move to privatize the stock market would help it operate on a more professional and transparent basis and introduce new products and services. Referring to the fluctuations on the stock market, Suhaimi said it was the result of market manipulation by some major players. The turbulence also stemmed from the lack of transparency on the part of some companies in releasing information in public interest, he added. "The CMA is actively working on launching the Saudi Arabian Financial Exchange (SAFX) ... (which) will become a private sector corporation based on the leading-edge international model for exchanges," Suhaimi said. "The exchange will have a mandate to develop a range of products and services that are vital to the development of our capital markets and the competitiveness of our securities industry." Procedures to "establish SAFX as a shareholding company will begin soon," Suhaimi said, adding that studies prepared by the CMA envisaged "opening part of the companyÂ’s shares to public subscription." Speaking about the stock market plunge in recent months, Suhaimi said many investors, especially small and first-time investors ignored fundamentals of investment. "Unless investors truly understand both the opportunities and the risks of todayÂ’s market, too many may fall victim to their own wishful thinking," he added. Stock markets by definition are prone to short-term volatility due to, for example, unexpected news. "Taking a medium to long-term view means that real investors can ride out shor-term swings," he said and urged investors to conduct a thorough study on companies before putting their hard-earned money in their stocks. Suhaimi attributed the tremendous growth of the Saudi stock market over the past seven years to high-levels of economic growth, sustained increase in oil prices, and the positive sentiment of investors toward the local economy. He advised investors to do their homework and then invest carefully in line with their own risk profile. He did not favor borrowing to invest in the stock market. "It is an extremely high risk strategy." He promised tough action against those who try to destabilize the market. "We will not permit those who seek to manipulate market prices, engage in insider dealings, or abuse their positions of trust for personal gains to go unpunished," he warned. He said the CMA would develop effective surveillance tools to monitor industry compliance. "We have coordinated with SAMA to limit bank lending in the stock market." The CMA chief spoke about a series of steps to strengthen the stock market. "We are redoubling our investor awareness efforts ... We will be launching a new website dedicated to investor education. We will also reach out to investors by conducting a series of workshops throughout the country." He said CMA would check professionalism of officials charged with making investment decisions on behalf of investors. "We are also finalizing regulations for investment funds," he said. "We are also working closely with market participants to develop new instruments to channel surplus funds efficiently into the market." Suhaimi also disclosed plans to establish a corporate "sukook" market in the Kingdom. He also expected more companies to go public in the coming years. "I assure you that the CMA will do all that it can to ensure that we deepen our capital markets by listing more and more companies in the future." Sea change for Arabia. I suspect that the Saudis carefully watched J. Paul Bremer set up the Iraqi market from scratch, and now realize what a multiplying factor markets can be in an economy. Expect to see stock markets cropping up all over the ME soon after this. |
| Posted by:Anonymoose |
| #3 as well as the Iranian Stock Market.... |
| Posted by: Frank G 2006-05-11 20:02 |
| #2 I don't see this project having much success, based on the stellar performance and management of the SA stock exchange. But it'll be fun to watch! |
| Posted by: Thinemp Whimble2412 2006-05-11 19:52 |
| #1 Will the Princes still muscle in on anyone with a successful business? |
| Posted by: Grunter 2006-05-11 17:12 |