Riyadh, Asharq Al-Awsat- Saudi Arabia’s ailing stock market recovered yesterday on news King Abdullah bin Abdulaziz recommended foreigners be allowed to invest.
shares rose by almost the maximum 5 percent allowed in a trading day on Thursday.
The Saudi monarch’s recommendations were announced by Dr. Ibrahim al Assaf, the Minister of Finance, in a meeting with top investors, on the King’s instructions. Al Assaf briefed them on the recommendations discussed by the Supreme Economic Council on Tuesday to strengthen the bourse.
“The King ordered the proposals be studied urgently and the necessary measures be taken to realize them,” the Saudi Press Agency quoted Finance Minister Ibrahim al Assaf as saying after meeting private sector representatives.
King Abdullah also advised al Assaf to study the possibility of reducing the nominal value of shares to boost the market and create further liquidity, the SPA reported.
The news was greeted with relief by traders and the Tadawul All-Share Index (TASI) rebounded yesterday in the afternoon session after plunging 723.03 points of 4.85 percent in the morning session. At the close, the index recovered 706.34 points or 4.7% to 15,606.38 after falling below 15,000 points on Tuesday.
The market was also helped Wednesday by news from Saudi billionaire Prince Alwaleed bin Talal who announced he would invest up to 10 billion Saudi Riyals ($2.6billon) in the near future.
“Splitting shares is beneficial and allowing foreign residents [to invest] is a good decision. What happened a few months ago on the Saudi market is that speculators dominated the market and created a bubble”, the Prince said.
The Economic Council also agreed that the stock market freefall did not reflect the state of the Saudi economy, which was prospering across all sectors. Al Assaf also told investors the King has said that investing in the Saudi economy was investing in Saudi Arabia’s future and the future of its sons and daughters. For their part, the investors stressed that the economy was growing at a healthy rate and supported the government’s actions.