Add this to the reasons why 2016 isn’t the year for Saudi stocks – the IPO pipeline is drying up.
Two companies have announced plans for initial public offerings this year, down from six last year, putting the Saudi market on track for its slowest lineup since 2004. That compares with nine in Malaysia, another energy-dependent developing economy whose main stock index is poised for its third straight annual drop following the retreat in oil prices.
The dwindling IPO lineup is a complication for the kingdom as it plans to double the size of its US$371 billion stock exchange and boost the number of traded companies by about 50 per cent to 250 in seven years. The country is overhauling its economy to reduce its dependency on energy, and that includes cutting government spending and selling shares in the state-owned oil company Saudi Arabian Oil Co (Aramco) in early 2018.
“You can forget about new companies wanting to go public,” said Mohammed Alsuwayed, the head of capital and money markets at Adeem Capital in Riyadh. “Reduction in spending, contractionary policy and austerity measures are not good for the market, and if it’s not good for the market then it’s not going to provide any good valuation or sentiment for companies that were considering IPOs.”
While the head of the nation’s Capital Market Authority says the equity market is ready for Aramco’s IPO, potentially the world’s biggest, the Tadawul All Share Index is the worst performer across the Middle East and North Africa this year, even after the kingdom allowed foreigners direct access to its stock market for the first time last year and further relaxed the rules two weeks ago.
Al Yamamah Steel Industries announced its plan to go public at the end of March, and L’Azurde Co for Jewelry followed more than a month later. With the number of deals worldwide almost halving this year to about 1,290 compared with all of last year, Saudi Arabia’s dwindling IPO pipeline is not unique. But unlike most countries, the kingdom prohibits foreigners from participating in share sales.
That will soon change. As part of its plan to open one of the world’s most closed equity markets, the Tadawul Stock Exchange will allow foreign investors to subscribe to initial public offerings in the kingdom for the first time starting January 1.
It’s a “positive” step, said Mohamad Al Hajj, a strategist at EFG-Hermes in Dubai. “A successful attempt in attracting foreign money following the new qualified foreign investor rules would help the IPO market going forward.”
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UAE Falcons
Carly Lewis (captain), Emily Fensome, Kelly Loy, Isabel Affley, Jessica Cronin, Jemma Eley, Jenna Guy, Kate Lewis, Megan Polley, Charlie Preston, Becki Quigley and Sophie Siffre. Deb Jones and Lucia Sdao – coach and assistant coach.
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
Company%20Profile
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Real Madrid 1
Ronaldo (87')
Athletic Bilbao 1
Williams (14')
Find the right policy for you
Don’t wait until the week you fly to sign up for insurance – get it when you book your trip. Insurance covers you for cancellation and anything else that can go wrong before you leave.
Some insurers, such as World Nomads, allow you to book once you are travelling – but, as Mr Mohammed found out, pre-existing medical conditions are not covered.
Check your credit card before booking insurance to see if you have any travel insurance as a benefit – most UAE banks, such as Emirates NBD, First Abu Dhabi Bank and Abu Dhabi Islamic Bank, have cards that throw in insurance as part of their package. But read the fine print – they may only cover emergencies while you’re travelling, not cancellation before a trip.
Pre-existing medical conditions such as a heart condition, diabetes, epilepsy and even asthma may not be included as standard. Again, check the terms, exclusions and limitations of any insurance carefully.
If you want trip cancellation or curtailment, baggage loss or delay covered, you may need a higher-grade plan, says Ambareen Musa of Souqalmal.com. Decide how much coverage you need for emergency medical expenses or personal liability. Premium insurance packages give up to $1 million (Dh3.7m) in each category, Ms Musa adds.
Don’t wait for days to call your insurer if you need to make a claim. You may be required to notify them within 72 hours. Gather together all receipts, emails and reports to prove that you paid for something, that you didn’t use it and that you did not get reimbursed.
Finally, consider optional extras you may need, says Sarah Pickford of Travel Counsellors, such as a winter sports holiday. Also ensure all individuals can travel independently on that cover, she adds. And remember: “Cheap isn’t necessarily best.”
Confirmed%20bouts%20(more%20to%20be%20added)
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Results
6.30pm: Maiden Dh165,000 (Dirt) 1,600m
Winner: Celtic Prince, David Liska (jockey), Rashed Bouresly (trainer).
7.05pm: Conditions Dh240,000 (D) 1,600m
Winner: Commanding, Richard Mullen, Satish Seemar.
7.40pm: Handicap Dh190,000 (D) 2,000m
Winner: Grand Argentier, Pat Dobbs, Doug Watson.
8.15pm: Handicap Dh170,000 (D) 2,200m
Winner: Arch Gold, Sam Hitchcott, Doug Watson.
8.50pm: The Entisar Listed Dh265,000 (D) 2,000m
Winner: Military Law, Antonio Fresu, Musabah Al Muhairi.
9.25pm: The Garhoud Sprint Listed Dh265,000 (D) 1,200m
Winner: Ibn Malik, Dane O’Neill, Musabah Al Muhairi.
10pm: Handicap Dh185,000 (D) 1,400m
Winner: Midnight Sands, Pat Dobbs, Doug Watson.
HEADLINE HERE
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The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
The biog
Siblings: five brothers and one sister
Education: Bachelors in Political Science at the University of Minnesota
Interests: Swimming, tennis and the gym
Favourite place: UAE
Favourite packet food on the trip: pasta primavera
What he did to pass the time during the trip: listen to audio books