Will the Saudi Arabian Stock Exchange’s Initial Stock Market Momentum Continue?

The Saudi market is regaining the momentum of initial public offerings, supported by subscriptions that took place in the second quarter of the year, which is expected to accelerate in the second half of the year as two new companies finally receive regulatory approvals. From the Capital Markets Authority.

The first is Addis Holding, which operates in the drilling and oil and gas production sector, offering about 338.72 million shares for public subscription (representing 30 percent of the company’s total shares).

According to Bloomberg, the company, which is backed by the Saudi Public Investment Fund, could raise about $1 billion from the IPO, which would be one of the kingdom’s biggest IPOs in the current year 2023.

And the Saudi Public Investment Fund has entered into a partnership with the major owners of Addis to buy it in 2021 and delist it from the London Stock Exchange, in a deal that values ​​the company at around $516 million.

The second company is “Sal Logistics Services”, which is offering 24 million shares for public subscription, representing 30 percent of the company’s total shares.

In addition, the market is awaiting a number of offers, the timetable for which has not been determined, including Aramco’s secondary offering, as well as the listing of Aramco Trading.

The recovery of the pace of offers in this way came after its slowdown at the beginning of the year, while the market saw many subscriptions and listings in 2022 with a total of 49 companies and funds.

There were 17 companies in the main market on last year’s listings, with total revenue of about 37 billion riyals ($9.85 billion), compared to 17.18 billion in 2021, compared with nine offerings in the same market. Rial ($4.57 billion) in 2021.

Since the start of the year, the general index of the Saudi market has increased by 10 percent, while the market has seen several new listings.

In the past week, four newcomers entered the market after succeeding in raising 2.9 billion riyals through subscriptions, namely:

Investor confidence

For his part, Saudi economist, Salem Bajaja, points to the “Sky News Arabia Economy” website, the growing confidence in the Saudi market, which is demonstrated by the success of recent offers such as Jamjoom Pharma and First Mills.

Bajaja said the market authority has offered several shares in the past and is waiting to revive the offers in the second half of the current year 2023, pointing out that previous offers have attracted many. Investors.

He points out that this is a clear sign of the expected market recovery in the second half of the year, which indicates investors’ confidence in the Saudi market in general.

This is evidenced by the increases registered by newly listed shares such as the “Jamjoom Pharma” share, which reached a maximum of 30 percent (the top of the share profit in its first trade on the market, the highest price was recorded at 78. Rials).

Jamjoom Pharmaceuticals offered 30 percent of its shares in the market for public subscription at 60 riyals per share, reaching 11 times the borrowing coverage for individuals, and the closing share price was set at 60 riyals.

The total value of the orders during the book-building process for the categories participating in the subscription is approximately 84.6 billion Saudi riyals.

The Saudi Arabian economist also mentions the offering of “First Mills” as part of his commitment to investors’ confidence in the market and its role in creating a new investment climate.

On Thursday, shares of “First Mills” rose 25 percent in its first trade on the Saudi market. The company issued 16.65 million shares, representing 30 percent of its capital. Individuals’ subscription is covered by 997 percent.

The public market also saw the subscription of the human resources company, in which individuals held a stake of 1,644.9 percent, after the company issued 4.5 million shares (30 percent of its capital), of which 90 percent was reserved. 10 percent for participating companies and individual investors.

On Monday, the stock rose 30 percent in its first trading session.

After 21.43 million shares were issued (after the company increased its capital by 30 percent of its total shares, the market saw subscription to the flexible Murabaha, which closed last Wednesday, up 20 percent in the first trading session. )

This week, the Saudi Capital Markets Authority approved six new IPOs for small companies on the Mutual Capital Market (NOMU).

This recovery

For his part, financial market expert Hanan Ramses, in exclusive reports to “Economy Sky News Arabia” explains the factors leading to the increase of investors’ confidence in the Saudi markets, which promotes a significant boom in IPOs this year.

• The Kingdom of Saudi Arabia has a comprehensive plan to integrate the formal and informal, public, private and private economy for inclusion in the money market.
• The Saudi market – aiming to be the third largest financial market in the world – enjoys the presence of strong companies such as Aramco, which comes in second in the world by market value.
• The Kingdom works to support existing institutions and strengthen their positions. Here is a mention of Shrek’s plan to pump billions of Riyals into corporate favors.
• The Kingdom works to encourage companies that wish to list and offer their shares on the stock exchange to gain marketing and competitive opportunities.
• The Kingdom is interested in strengthening the investment environment, preparing it technologically and informationally, and facilitating all procedures through various applications.

“Before the recent oil price fluctuations, the market index was able to approach 14,000 points,” Ramses points out, adding that the Saudi market always offers everything new, in the official or parallel market (NOMU), meeting all views and investment desires in the various sectors.

A financial market expert explains that in light of allowing business for non-residents in the Kingdom, trade has increased and choices have diversified, as well as restrictions allowing foreigners the ability to own companies in the Kingdom, which has encouraged all investors to invest. The Kingdom enjoys strong investment opportunities, especially in light of the growth rates it is achieving. .

It drew attention to the diversification of investments and the Kingdom’s expansion plans in many sectors and activities, factors that supported the operation of the IPO market and added new investment activities that were insufficient in initial offerings.

Despite the economic challenges facing the world, the Saudi market recorded a positive performance in the first quarter of the year, driven by growth in most sectors (led by consumer services, communications, basic goods and energy sectors).

The general index rose 1.07 percent to end the quarter at 10,590.1 points.