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MENAFN - Khaleej Times - 16/03/2013

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(MENAFN - Khaleej Times) HSBC Holdings, the biggest underwriter of bond sales in Saudi Arabia last year, sees the country's equity market opening to foreigners as early as next year amid rising demand for assets in the largest Arab economy.

"There's tremendous appetite," Simon Cooper, chief executive officer of London-based HSBC's Middle East business, said in an interview. "I'd say 12 to 18 months. Steps are being taken at the appropriate places to open the market up."

Cooper, head of HSBC in the Middle East since 2009, joins a rising number of bankers predicting that the biggest oil exporter will allow direct overseas investment in its 387 billion stock market. John Burbank, founder of 3.7 billion hedge fund Passport Capital, said the market may attract as much as 30 billion of inflows and could open within a year.

"I think there's a strong desire to see it happen from both sides - buyer and seller," Cooper said at HSBC's offices in Dubai.

"Saudi has got a very strong regulatory environment - that means they do things properly and take their time."

Saudi Arabia only allows non-resident foreigners outside of the six-nation GCC to invest through equity swaps and exchange-traded funds, or ETFs, and last year said it would only open the market on a gradual basis.

In February, the kingdom replaced the head of its Capital Market Authority with Mohammad Al Shaikh, who represents Saudi Arabia at the World Bank. He holds a law degree from Harvard University and specialises in mergers and acquisitions, capital markets and project finance, according to the Web site of US law company Latham & Watkins, which practices in Saudi in association with Al Shaikh's law office.

HSBC, which owns 40 per cent of Riyadh-based Saudi British Bank, is "well-positioned" to capture any foreign flows that may come into the country as the market opens up, Cooper said.

"If you look at economies in the world that are growing that have both the wealth and plans to invest in their economy then Saudi is a logical place to invest in," he said. "We're well placed to be part of that growth." Banks are boosting their presence in Saudi Arabia as investors seek greater access to the Arab world's largest bourse and most important economy.

"That's where the excitement is," Cooper said. "When the market opens up and foreigners can buy shares then you get liquidity coming and the market grows."


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