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  • The positive performance of the last 10 subscriptions in the Saudi stock market, whose value increases by 287 million riyals

    17/08/2020

    ​Majid Al-Khalidi from Riyadh​

    The last ten IPOs in the Saudi market achieved a positive performance for the majority of them since the beginning of their offering, as the market value of nine of them increased, despite the fact that global financial markets have gone through an exceptional circumstance in the past months caused by the Corona pandemic.
    According to a monitoring unit of the reporting unit in Al-Eqtisadiah newspaper, the market value of the last ten IPOs (not including REIT funds) increased by about 4.5 percent over the IPO price.
    Traders in the Saudi market have become accustomed to the drop in the value of listed shares below the offering price, such as IPOs, which were before 2015.
    This may be due to the new allocation method by directing most of the offering to investment funds, which now amount to about 90 percent of the offerings, exceeding the nominal value of ten riyals, especially with the order book building system, through which the offering price is determined.
    The market value of the last ten subscriptions increased by 287 billion riyals, as the values of these companies at the offering amounted to about 6.44 trillion riyals thanks to the largest Saudi Aramco IPO in history, which took place at the end of last year.
    While the share price of "Aramco" is trading at an increase of the offering price by about 4.2 percent, or the equivalent of 270 billion riyals, meaning that "Saudi Aramco" accounts for the majority of the increase in the market values of the new offerings thanks to its large size.
    In the event that the Saudi Aramco IPO is excluded, the remaining offerings will have risen by about 43%, which is a big premium over the offering price. The ten IPO period extends since mid-2018.
    If it is taken as an example for an individual investor or financial institution that subscribed in the last ten IPOs in the Saudi market with a value of 100 thousand riyals for a single offering (with a total of one million riyals), then the total return from the market increase only amounted to about 48 percent (1.48 million riyals). Within two years, an average of 24 percent for one year.
    The majority of the last ten IPOs, some of which have been trading in the market for two years, still maintain trades above the offering price, and this definitely increases the efficiency level of the market​.
    In detail, the shares of Wataniya Education came the highest since its introduction on the market, compared to the rest of the ten offerings, as its shares rose by 163 percent to reach 1.33 billion riyals, compared to a market value of 817 million riyals upon offering.
    This was followed by Sumou Real Estate Company, which trades in the parallel market, with its market value amounting to about 1.2 billion riyals, compared to about 600 million riyals at the time of the offering, with an increase of 103 percent, noting that the company was launched in May.​
    ​​​Third, "Sulaiman Al-Habib" came as the company's market value rose by about 13.1 billion riyals to 30.66 billion riyals, with an increase of nearly 75 percent, then the new guest, "Amlak International", which achieved a 40 percent increase in its market value to reach 2.03 billion riyals, compared to about 1.44 billion riyals before trading its shares.
    On the other hand, the only offering, which is trading below the IPO price, is the "Arab Centers" company, where the stock's performance has been significantly affected by the repercussions of the spread of the Coronavirus, as it retreated from its highest level during the current year of 31.95 riyals to 25.6 riyals according to the closing of the last trading session, A price that is 1.2 percent below the offering price of 26 riyals.

    Economic Reports Unit

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