RIYADH: Saudi Arabia intends to expand its stock market this year to attract more foreign investors, and seeks to become an international capital markets hub, Mohammed bin Abdullah bin Ibrahim Al-Kuwaiz, chairman of the Capital Market Authority (CMA), told Reuters
Qualified Foreign Investors (QFIs) were allowed to invest directly in Saudi stocks in 2015 and some qualification requirements were facilitated late last year.
Al-Kuwaiz said: “We expect the release of new amended draft rules each and every year, in order to achieve the Vision 2030; an ambitious plan that aims to diversify the economy without having to rely on oil revenues, in order to open and develop the capital markets.”
The CMA is revising the rules, helping the Saudi market to enter international equity indexes, thus bringing more foreign money.
New listing rules are expected to be issued in the next month or two, alongside new rules for mergers and acquisitions that will have an important role in directing the debts’ issuance.
He said: “This is part of reviewing the Saudi rules of issuance and listing that aim to facilitate the issuance and listing of financial documents in general, and debt instruments in particular.”
Many disclosure and offering requirements will be waived for companies that offer their stocks for trade publicly and have already gone through much of the process for their equity listings, he said.
The regulating rules to create special purpose entities collecting assets to issue debts will allow the CMA to approve and license these special purpose entities in order to stimulate the debt issuance activity.
Al-Kuwaiz pointed out that the CMA has five or six pending applications applied by companies from various sectors to enter the main equity market and NOMU; a parallel market inaugurated by the Kingdom for small and medium enterprise (SME). There are also 25 to 30 other mandates with banks to be listed later, all of which are from Saudi companies, he added.
“Early discussions with non-Saudi issuer companies that would like to reach the foreign investors are already being held. The listing of foreign companies is expected to start as of mid 2018,” said Al-Kuwaiz.
“The Saudi Stock Exchange (Tadawul) is ready for any size of listing for Saudi Aramco. The only remaining problem is the coordination of Tadawul with any other stock exchange, in which Aramco stocks can be listed,” he added.
The Saudi authorities are trying to list 5 percent of Aramco stocks by the end of 2018 in Tadawul and one or more international markets. London, New York and Hong Kong are the listed options.
He ascertained that “the last missing piece is the decision of whether it is a dual listing and whether the international market and the listing structure are determined.”
The Kingdom plans to reveal the new rules facilitating the stock listing and encouraging the mergers and acquisitions among the companies of Tadawul, the biggest stock exchange in the Middle East.