Higher interest rates hurt many sectors; no steady downtrend, uptrend in Saudi market: Alhussan

Khalid Alhussan, CEO of Saudi Tadawul Group

Khalid Alhussan, CEO of Saudi Tadawul Group Holding, said higher interest rates hurt several sectors, including real estate and stock markets and this is not only in Saudi Arabia.

Liquidity is affected by several factors, such as borrowing. The new listings in the Saudi market in 2022 and the ones expected this year may be a race for liquidity, Alhussan added in a lecture organized by King Saud University.

“We could view weak market liquidity in general, whether in the daily trading or undersubscribed initial public offerings (IPOs), as risky if there is a problem in any of these systems, such as facing a very tight liquidity, investors’ inability to liquidate their portfolios through the market, or unsubscribed IPOs,” the CEO added.

“We could view weak market liquidity in general, whether in the daily trading or undersubscribed initial public offerings (IPOs), as risky if there is a problem in any of the two systems – either due to very tight liquidity and investors’ inability to liquidate their portfolios through the market, or unsubscribed IPOs,” the CEO added.

Today, both systems function properly, as new offerings are strongly covered, while market turnovers are satisfactory compared to regional or emerging peers.

He added that there is no steady downtrend or uptrend in the Saudi market, which is normal in all stock markets as they are linked to economic cycles due to several factors such as oil prices, economic efficiency, higher interest, etc. The strong pace of listings impacted the market, as they vie to raise liquidity.

The Saudi Exchange (Tadawul) continues to improve daily market liquidity, given that it is an important tool to attract new investments, issuances and brokerages to operate in the market.

Alhussan expects dual listings to see a stronger momentum in the coming years, driven by the integration of stock markets in the GCC region.

For Nomu-Parallel Market, the CEO said more than 60 applications are under study for new listings.

The existing laws do not hinder small and medium-sized enterprises (SMEs) from listing on Nomu, Alhussan affirmed, adding that work is ongoing to align the needs of these SMEs with economic needs and investor protection, as laws should ensure a balance.