(MENAFN - Arab News) JEDDAH, 1 November 2007 — The Saudi Capital Market Authority (CMA) plans to restructure the stock market in order to keep pace with rapid changes in the market such as the increasing number of listed companies and the diversification of their activities. The Saudi stock market regulatory authority also intends to make the stock market indices, both general and sectional, more transparent and realistic. CMA welcomes suggestions from stock market investors and traders who are concerned with the intended restructuring.
As part of its efforts to make the share market index reflect market realities, CMA has decided to classify the listed companies into 14 sectors instead of the present 8. Besides considering a listed company's major activity, the level of its assets utilization and the income from its separate activities will also be considered in the new classification system.
The CMA statement said the new sectors are banks and financial services, insurance, telecommunication, real estate development, petrochemical industries, media and publishing, energy, transport, hotel and tourism, agriculture and food industries, building and construction, industrial investment, retail sector and multi-investments.
The market value of each listed company in the general and sector-wise indexing will be on the basis of the total value of the number of shares available for trading. Any share not available for trading will not be considered in the computation of the index. Consequently the shares owned by the government and its establishments and a foreign partner whose shares are not allowed to be sold without the approval of the supervisory agency will not be considered in the indexing. The shares of anyone who owns 10 percent or more of shares of any listed company will also not be considered in indexing.
The CMA statement also said the Tadawul would review the number of available shares of each company in the market every three months.
The proposals regarding the restructure of the share market should be sent to the CMA for supervision and monitoring Tadawul. The last date for receiving the suggestions is Nov. 15. Nassir Al-Rashidi, a financial analyst, said restructuring would force companies to become more transparent which will in turn benefit ordinary investors.
The Saudi stock market reacted positively to CMA's announcement. The Tadawul All-Share Index (TASI) surged 136.34 points or 1.61 percent yesterday to close at 8,621.45. The index gained 8.67 percent so far this year.
Insurance stocks took a battering yesterday. Shares of Allied Cooperative Insurance Group (ACIG) dropped by 6.92 percent to SR84, Sanad Insurance & Reinsurance Cooperative Company by 2.90 percent to SR58.50, Saudi United Cooperative Insurance Company by 2.57 percent to SR66.25, Saudi Fransi Cooperative Insurance Company by 1.74 percent to SR112.75 and Saudi IAIC Cooperative Insurance Co. by 1.49 percent to SR115.
Kingdom Holding Co. Shares jumped by 10 percent to SR11, Tabuk Agriculture by 9.46 percent to SR72.25, the National Company for Glass Industries by 7.23 percent to SR63, Saudi Hollandi Bank by 6.66 percent to SR56 and Arab National Bank by 6.30 percent to SR88.50.
Saudi Electricity Co. (SEC) shares soared 4.08 percent to SR12.75 after it announced 5.8 percent increase in its third quarter profit.
In the telecom sector, shares of Saudi Telecom Co. (STC) increased 0.72 percent to SR69.75 and Etihad Etisalat's shares rose 0.33 percent to SR75.50.
Out of 105 stocks traded, shares of 75 companies increased while 19 companies were in the red.
The stock market turnover reached SR8.42 billion yesterday.
BMG Index Back to Positive Territory
The BMG Saudi Index ended the last trading session of the week in positive territory, with the index gaining in yesterday's session 0.9 percent to close at 469.8 points. Turnover also climbed to SR3.6 billion (951 million), recording a 5.2 percent increase.
All the sectors ended the session on a positive note. The services sector was the best performer, rising by 3.5 percent. The agricultural sector improved by 2 percent, while both the industrial and insurance sectors advanced by 0.6 percent.
Twenty-one shares in the BMG Index experienced gains, while 3 remained inactive and 6 declined. SABIC, a constituent of the Industrial sector and the largest market cap stock in the index, closed at SR148.75.