(MENAFN- Kuwait News Agency (KUNA)) Latest share subscription in the Saudi National Commercial Bank (NCB) is forecast to bolster confidence in the local banking sector with respect of shoring up the Kingdom's economy in general and boosting mega ventures in particular.
The Saudi financial market witnessed, several days ago, what was widely described as the "largest subscription on record," where the number of subscribers amounted to 1.26 million, with a total value of 311 billion Saudi riyals (one Saudi riyal equals USD 0.27).
Dr. Abdulwahab Abu Dahesh, a renowned Saudi writer and economic expert, said in an interview with Kuwait News Agency (KUNA) that the huge number of subscribers who took part in the NCB's initial public offering (IPO) signaled solid status of the Saudi economy and "existence of high liquidity that warrants investments." The IPO's attraction of a large number of investors is also due to the fact that the Saudi banking sector is one among a small number of sectors globally that have not been affected with ripples of the global economic crisis. It is one of the most favored investment sectors in the medium and long terms, considering its high profits. As to the NCB, "it is one of the best banks in Saudi Arabia in terms of performance. It tops all the banks listed in the stock market," added Dr. Abu Dahesh in the interview with KUNA.
Substantial success of the bank's stock subscription will give a lucrative signal to foreign entrepreneurs, he said, forecasting focus of these investors, once they have joined the market soon, on the shares of the banking and petrochemicals sectors, which they rank among the strongest foundations of the Saudi financial market.
The subscription proceeds were unprecedented in the Saudi market's history and exceeded all forecasts, said the Saudi expert, adding that the citizens were lured with the bank high proceeds and the profits per share.
The Saudi Government was keen on making sure that the largest number of citizens take part in the IPO, particularly small investors with capacity to buy the shares at 45 riyals each.
Dr. Abu Dahesh also opined that participation of a large number of limited-capital investors also reflected the fact that there are a few investment means, such as bonds, sukuks and saving funds, also noting that many inexperienced ones abstain from spending their money in the real-estate sector.
Economics professor at King Abdulaziz University Dr. Wadee Kabli said the subscription that involved 1.26 million investors was the first of its kind since 2006, when the local stock market collapsed.
The lucrative facilities that were offered by the participating banks were crucial in hiking the invested capitals' value, particularly in the last two days of the subscription. He concurred with Dr. Abu Dahesh as to the need for creating new channels for infesting the high surplus of liquidity in the hands of many citizens.
Muna Al-Manjoumi, in charge of the Al-Hayat newspaper's economics section, also expressed identical views regarding the need for new investment opportunities, noting that the investors shifted to the stock market as a result of the recent government "corrections" in the property market.
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