Saudi IPO subscriptions plunge 53pc in Q1
Riyadh, June 20, 2013
The subscriptions to initial public offerings (IPOs) in the Saudi stock market plunged 53 per cent in the first six months to SR1.2 billion ($319 million) from SR2.5 billion during the same period last year, said a report.
This was mainly due to a drop in the lower capitalization of the companies that launched IPOs this year compared to the companies launched last year, reported the Arab News.
According to experts, only Saudi citizens are allowed to subscribe for IPOs. Small Saudi investors in the share market prefer to subscribe to IPOs because of the price fluctuations of the initial day.
However, the trend is likely to change because of a decision of the Capital Market Authority (CMA) to limit the fluctuation of share value on the first day to 10 per cent.
However, experts feel the decision is likely to dampen the demand for IPOs in the future.
No new company has launched an IPO after the latest CMA decision, the report stated.
The stock market grew at the rate of 8 per cent since the beginning of the year till June 16 to reach 7,330 points gaining 529 pints compared to the end of last year when it registered 6,801 points, the study said.