JEDDAH: Saudi Arabia’s parallel market Nomu is likely to help boost the growth of small and medium enterprises (SMEs), said a report issued by Jadwa Investment on Monday.
According to the Small and Medium Enterprise Authority (SMEA), bringing the Kingdom’s SMEs contribution in line with global peers could add a further SR1.1 trillion ($293.3 billion) to the country’s gross domestic product (GDP).
The report said: “Although Nomu is open to all types of companies, the number of SME listings is expected to rise in line with the government initiatives to drive up SMEs contribution to the GDP.”
The National Transformation Program (NTP 2020) has also pinpointed three strategic areas through which SMEs can help the Saudi economy. These include: Increasing the culture of entrepreneurship, raising the contribution of SMEs to the GDP and contributing to the creation of employment opportunities.
As a result, a number of initiatives have recently been launched to boost the growth of SMEs. The recently launched program, Musharakah, aims at facilitating the growth of SMEs, especially at the start-up level. The program is part of a larger government-backed SR4 billion fund.
“Looking at the Musharakah program and Nomu together, we can see the strategic thinking behind government policy in trying to develop a path for SMEs that allows them to progress,” said the report.
Saudi Arabia is the first country in the Gulf region to launch a parallel market, but such markets have existed since the 1970s in many mature economies. Perhaps the best example of a parallel market is the US NASDAQ, which was established in the early 1970s.
During the mid to late 1990s, many European exchanges also went about launching their own versions of a parallel market, including AIM (UK), Neuer Markt (Germany) and the Nouveau Marché (France). By and large, such markets have been a relative success, helping spawn a number of prosperous companies, which have ultimately sought full listing in the main market.
“If the success of the US and some European parallel markets is replicated by Nomu, then we expect not only to see deeper and more diverse capital markets but also a more favorable business environment,” said the report.
The report said that replicating the success of some of the more established parallel markets would not be easy.
The example of the Neuer Markt in Germany illustrates how the perception of weak regulatory oversight combined with inherently riskier and volatile nature of parallel markets can be detrimental, it added.
The report goes onto to state that despite this, “the Capital Markets Authority (CMA) has published very detailed and concise provisions related to Nomu. Although these regulations are looser than Tadawul All Share Index (TASI) requirements, they are stricter than international equivalents and underline the CMA’s approach in giving priority to sound regulation ahead of hurried implementation.”
Saudi Arabia’s parallel market to help boost SMEs’ growth: Report
Saudi Arabia’s parallel market to help boost SMEs’ growth: Report
Closing Bell: Saudi main market closes the week in red at 10,526
RIYADH: Saudi equities ended Thursday’s session modestly lower, with the Tadawul All Share Index slipping 14.63 points, or 0.14 percent, to close at 10,526.09.
The MSCI Tadawul 30 Index also declined 3.66 points, or 0.26 percent, to 1,389.66. In contrast, the parallel market outperformed, as Nomu jumped 237.72 points, or 1.02 percent, to close at 23,430.93.
Market breadth on the main market remained tilted to the downside, with 156 stocks ending lower against 99 gainers.
Trading activity eased further, with volumes reaching 80.46 million shares and total traded value amounting to SR1.66 billion ($442 million).
On the movers’ board, Saudi Industrial Export Co. led the gainers, rising 6.6 percent to SR2.10, followed by Consolidated Grunenfelder Saady Holding Co., which advanced 6.43 percent to SR9.60.
Raoom Trading Co. climbed 4.36 percent to SR61.05, while Astra Industrial Group gained 4.35 percent to close at SR139. Riyadh Cables Group Co. added 3.77 percent to end the session at SR135.00.
On the downside, Methanol Chemicals Co. topped the losers’ list, falling 5.96 percent to SR7.41.
Flynas Co. retreated 5.43 percent to SR61.00, while Leejam Sports Co. dropped 5 percent to close at SR100.80.
Alramz Real Estate Co. slipped 4.64 percent to SR55.50, and Almasane Alkobra Mining Co. declined 4.55 percent to SR84.00.
On the announcement front, ACWA Power said it has completed the financial close for the Ras Mohaisen First Water Desalination Co., a reverse osmosis desalination project with a capacity of up to 300,000 cubic meters per day, alongside associated potable water storage facilities totaling 600,000 cubic meters in Saudi Arabia’s Western Province.
The project was financed through a consortium of local and international banks, with total funding of SR2.07 billion and a tenor of up to 29.5 years, while ACWA Power holds an effective 45 percent equity stake.
Shares of ACWA Power ended the session at SR185.90, up SR0.2, or 0.11 percent.
Meanwhile, Consolidated Grunenfelder Saady Holding Co. announced the sign-off of a customized solutions project with Saudi Aramco Nabors Drilling Co., valued at SR166.0 million excluding VAT.
The 24-month contract covers the sale and maintenance of field camp facilities, with the financial impact expected to begin from the first quarter of 2026.
