Broker-Dealers Slated To Flock To Saudi Stock Exchange

BrokerDealer.com blog update courtesy of extract from July 22 coverage from Bloomberg LP

bloomberg saudi exchange storySaudi Arabia, the world’s biggest exporter of oil and de facto leader of OPEC, is removing barriers to one of the world’s most-restricted major stock exchanges as the government pursues a $130 billion spending plan to boost non-energy industries. King Abdullah, the 90-year-old monarch, has kept the economy expanding at an average rate of 6.4 percent in the past four years even as Middle Eastern neighbors from Egypt to Iraq grappled with political turmoil.

The Tadawul surged 2.8 percent to 10,025.14 at the close, the strongest level since May 2008.

“The big sleeping giant in the region is Saudi Arabia, a well-capitalized and large market that foreigners couldn’t get access to,” Gary Dugan, the chief investment officer at National Bank of Abu Dhabi PJSC, said by phone from Abu Dhabi. “It’s exciting. It gives greater credibility to the region.”

A listing of broker-dealers in the middle-east can be found via http://brokerdealer.com/databases/broker-dealer

“If you assume a neutral allocation to the market, and assuming the 4 percent that MSCI is guiding for, we will be talking about $40 billion” of foreign inflows in Saudi Arabia’s exchange, Dubai-based Rami Sidani, who oversees the $343 million Schroders International Selection Fund, said by telephone today.

“The move by Saudi Arabia helps accelerate efforts by the Gulf into becoming a more mainstream destination for international investors,” Ryan Huang, Singapore-based market strategist at IG Ltd., said by e-mail today. “Opening up the market will be a liquidity boost for Saudi corporations.”

At least three banks, including HSBC Holdings Plc and Deutsche Bank AG, have executed test trades, three people said, asking not to be identified as the plans are private. Access for money managers outside the GCC has so far been limited to indirect routes, including equity swaps and exchange-traded funds.

The full story from Bloomberg LP can be found via this link: http://www.bloomberg.com/news/2014-07-22/saudi-to-open-up-531-billion-stock-market-to-foreigners.html