The Saudi stock market is still in need of more new subscriptions to capital despite the current large cash liquidity, a number of financial experts said. Financial Expert Ammar Shata, managing director of Al-Khabeer Company, said new subscriptions satisfy citizens' market demands, adding that it is difficult for the Capital Market Authority to issue a list of companies whose shares will be floated throughout the entire year, as well as the number of these shares, describing this matter as “unacceptable and unrealistic”. He also said new subscriptions satisfy the ambitions of citizens and constitute an instrument for improving their cash savings. He urged the authorities to look carefully into the management and regulations of new companies to find out whether they are ready for public subscription and whether they satisfy the necessary conditions and requirements. Shata stressed that the Capital Market Authority should focus more on production companies with regular cash flows and less on nascent companies which have not yet entered the production phase. “New companies face numerous problems which have to do with their management, business plans and market penetration. Forty percent of these companies fail as a result of mismanagement, strong competition and other”, he said. On new subscriptions floated by the authority, Shata described these as inadequate. He added that the current IPO system is extremely suitable for citizens and achieves a satisfactory degree of flexibility. It also helps to restore liquidity to citizens following the subscription in order to enter into new companies. As a result, it is necessary to schedule the companies whose shares are offered for public subscription in order for the public to be able to keep abreast of any developments. Shata further said a high liquidity exists on the Saudi market but emphasis should be placed on companies with regular cash flows because they add value to the national economy. Ali Al-Hazemi, a member of the Securities Committee at Jeddah Chamber of Commerce, said new subscriptions are satisfactory and a channel for raising the savings of citizens. He also indicated that the return of past subscriptions was feasible and that some of the subscriptions achieved profitable returns ranging between 400 and 500 percent. He added that any new subscriptions are considered as an expansion of the market but that they must be studied by the Capital Market Authority: “The floating of any new subscriptions should be consistent with market trends”, he said. Economic researcher Enas Al-Ghaffari said the stock market is an internationally recognized investment channel and that it affords the largest number of citizens the opportunity of participating in successful investments. “It was noted that the authority has been focusing lately on introducing successful companies which have potential for expansion. Add to this the fact that the authority has restored the method of calculation of the issue premium,” she said. On the market's ability to accommodate new subscriptions, Al-Ghaffari said it was observed that a number of speculators take advantage of the floating of any new company on the market, even if its size does not allow it to draw a large amount of liquidity. She added that the market needs a large number of companies as proven by subscription to Zain Company which crossed the SR17 billion mark. __
