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13 11 2018
The share of institutional investment in the Saudi stock market increased by 1.8% at the end of the trading session on Thursday, November 8, reaching 88% of the total market value, compared to 86.5% at the end of the trading session. 2015 over nearly three years, because the money markets are paying off.
On the other hand, the share of non-institutional investments in local stocks fell from 11.5% to 12% of market capitalization, compared to 13.6% in the same period last year. One hundred by the end of 2015.
Among the most important measures that have increased the share of institutions and the behavior of institutional investors in the Saudi market, let us mention the decision to increase to 90% the share of the institutional investor in the SOPs, against 10% for individuals, and allow foreign investors to acquire strategic shares in the companies held. These companies and increase their transparency, which is difficult to achieve under the domination of individual investors.
Institutional investing is the category of investors with an institutional investment behavior, including specialized retail investors, companies, investment funds, government entities, portfolios managed for the Saudis , non-Saudis, Gulf institutions, swap agreements, strategic partners and qualified investors.
Non-institutional investments represent the category of investors with non-institutional investment behavior, including individual investors, large individual Saudi investors, nationals of GCC countries and resident aliens.
The behavior of institutional investors in the domestic stock market increased due to the shrinking role of Saudi individual investors by 20.4% and their share in total market capitalization fell from 32.1% to 25.5% in end of 2015.
The current share of the Saudis does not represent a non-institutional investment, more than half of them being the property of private investors, "13.5% of the stock market", and they are certainly institutionalized in their own right. investment.
In addition, Saudi institutions play a more important role in the local market, their share in Saudi Arabia increasing by 11.4% in almost three years, from 60.9% at the end of 2015 to 67.8%.
These notes reflect the successive reforms of the Saudi government and the CMA in the country that have transformed the market into a mature, less volatile and more efficient market as institutional investment increases and the share of non-institutional investment and individuals increases. decreases significantly over a short period of life.
The behavior of national equity investments has improved after FDI approval, bringing their share to 4.7% of the market at the moment.
The most important development steps for the market
The Saudi stock market has grown significantly over the past two years, taking a number of development measures that have supported institutional investments in local equities.
These measures led MSCI in June 2018 and FTSE Russell in March of this year to upgrade the emerging markets index by stages starting next year.
In light of the Kingdom's Vision 2030, the Saudi Financial Markets Authority (AMC) and the Saudi Stock Exchange (Tadawul) have made significant developments in the Saudi financial market to facilitate access And efficiency, increase levels of governance and transparency, and strengthen their position as market leaders in volume and liquidity in the region. And gravity.
Among the highlights of the Saudi financial market this year:
The clearing house was established in May 2018 with the aim of developing future clearing services in line with best risk management practices and international standards, which should be fully operational in the second half of 2019.
IPO and trading of government debt instruments for all classes of investors in April 2018, with the aim of deepening the sukuk and bond market by creating a curve of price for the sukuk and bond market.
Modify the mechanism of determining the closing price of the main market and parallel market growth in May 2018 of the mechanism of calculation of the VWAP to the auctioning mechanism, as well as improve the mechanism of opening the "tendering mechanism" of the market in order to standardize the mechanism of opening and closing the market in accordance with international best practice.
The development of the independent day care service in January 2018, which will allow institutional investors – local and global – to obtain better trading limits, should lead to the introduction of new regulations to reduce the risks associated with settlement procedures for all market participants.
The launch of a new service – optional – for asset managers in January 2018, which allows them to combine all asset management orders "private portfolios and investment funds" in a single global order, ensuring asset management in a fair and accurate manner.
Financial market procedures two years from now
Adjustment of the settlement period for securities trades listed on the Saudi Stock Exchange within two business days of the date of implementation of the "T + 2" transaction in April 2017, in order to strengthen asset protection controls and the normalization of the settlement period of all securities in accordance with global best practices in global markets.
Abolish the prepayment requirements of certain investors so that the availability of liquidity depends on the conditions agreed between licensees and investors, in order to harmonize business practices with international standards and to standardize the commercial procedures of institutional investors .
Trend Management, a service provided by the SDC's "deposit" to allow market members to manage any settlement expected by a transfer from their account, a purchase on the market, a loan through a securities lending transaction or a purchase transaction Optional.
Activate the delivery-versus-payment system and provide the necessary guarantees in accordance with the regulations in force in the Kingdom, in order to strengthen the level of protection of investor transactions.
The independent custody model was changed in April 2017 to allow custodians to refuse to settle uncertain transactions executed by authorized persons.
Allows the loan and lending of securities in the market in addition to covered short sales, to facilitate negotiations and create new investment opportunities for local and international market players.
The adoption of the corporate governance regulation, approved by the TRA in February 2017, increases shareholders' equity and board members as well as the transparency of the strategic ownership structure, roles and responsibilities of companies and external entities.
Allow qualified foreign investors to subscribe to Saudi companies from January 2017.
The launch of the "growth" – parallel market in February 2017, in order to provide new investment opportunities to a large segment of companies – including small and medium-sized enterprises – with demanding requirements. more flexible inclusion.
The launch of REIT to diversify and increase investment opportunities for all market players.
In December 2017, an agreement was signed with NASDAQ to develop clearing and settlement systems to improve Tadawul's technical infrastructure, the availability of new classes of securities in the Saudi market and the provision of new investor services.
The objective of setting up the securities depository is to improve the efficiency of filing and registration services in accordance with the standards applied in most international markets.
Establish partnerships and workshops that strengthen relationships with investors to open communication channels between listed companies and market players, analysts, regulators and regulators of the Kingdom, thus contributing to the level of transparency and disclosure in listed companies in accordance with international best practices in investor relations.
Saudi Arabia authorized qualified foreign investors to enter the Saudi stock market in June 2015 with the aim of expanding its base in the financial market. In 2016, the requirements of qualified foreign investors were updated and adjusted, and a third update in 2018 to facilitate the qualification requirements of foreign investors.
© 2018
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