Saudi to allow foreigners to purchase share offerings

Riyadh: Saudi Arabian stocks joined gains across most Gulf equities after the kingdom said it would let foreign investors take part in initial public offerings (IPOs), boosting overseas access to the Middle East’s largest exchange.
The Tadawul All Share Index added 0.1 per cent, its second straight advance. Abu Dhabi’s ADX General Index also rose 0.1 per cent and Bahrain’s BB All Share Index climbed 0.3 per cent. The Bloomberg GCC 200 Index, a gauge of the largest and most liquid companies in the six-nation Gulf Cooperation Council (GCC), increased 0.1 per cent.
Saudi Arabia’s Capital Market Authority approved regulations on book-building in IPOs that include qualified foreign investors, according to a statement posted on the regulator’s website after the end of trading on Thursday. The kingdom is adopting a series of measures to increase international participation in one of the world’s most restricted exchanges following a halving of oil prices in the past two years.
“News from Thursday shows that the market will be a lot more open for international investors, and with oil prices up, it’s creating some positive sentiment,” said Muhammad Faisal Potrik, the Riyadh-based head of research at Riyad Capital. “Overall, stock prices are pretty attractive at these levels, especially banks, and I think that’s why people are investing right now.”
Brent crude capped its strongest weekly increase in five months on Friday, as investors weighed speculation that Organsiation of Petroleum Exporting Countries (Opec) talks next month will lead to an output freeze. It has climbed more than 20 per cent since it dipped below $40 a barrel earlier in the month, meeting the common definition of a bull market.
Saudi valuations
Saudi equities are trading at about 12.2 times expected earnings, according to data compiled. That’s near the lowest valuation in four months, down from more than 16 times in June 2015. In addition to the IPO rules, which take effect from Jan. 1, regulations coming into force next month cut the amount of assets foreigners must have under management to invest directly in the nation’s stocks to 3.75 billion riyals ($1 billion) from 18.75 billion riyals.
Insurance companies Wataniya Insurance, Gulf General Cooperative Insurance and ACE Arabia Cooperative Insurance were the biggest gainers on a percentage basis on Sunday, each climbing at least 4.2 per cent. Saudi Basic Industries Corporation (Sabic), one of the world’s biggest petrochemicals manufacturers, was the largest contributor to the index gain.
Kuwait’s SE Price Index slipped 0.2 per cent and Dubai’s DFM General Index declined 0.4 per cent.