Saudi Arabia Appoints Al-Ghamdi Bourse CEO Amid Opening Bets
Saudi Arabia appointed Adel Al-Ghamdi as chief executive officer of the Arab world’s largest stock exchange, amid bets the kingdom will open its $416 billion market to foreign investors as early as next year.
Al-Ghamdi replaces Abdullah Al-Suweilmy, according to a statement posted on the exchange website today. He started as CEO on July 1 and was most recently general manager of the corporate finance and issuance division at the Saudi Capital Market Authority, it said. The benchmark Tadawul All Share Index (SASEIDX) fell less than 0.1 percent in Riyadh today, after rallying 5.6 percent in July, the fifth consecutive monthly gain.
Foreign investors outside the Gulf Cooperation Council countries can’t buy Saudi shares directly, and access the market through equity swaps and exchange-traded funds. Deutsche Bank AG and HSBC Holdings Plc (HSBA) are among banks that have predicted the market may loosen the restrictions. Such a move could attract as much as $30 billion of inflows, John Burbank, founder of $3.7 billion hedge fund Passport Capital LLC, said in February.
“The indications are that the plans are being put in place to open up to foreigners,” Oliver Bell, London-based money manager at T. Rowe’s Africa & Middle East Fund, said by e-mail today. “It’s encouraging that someone who understands foreign investors is put in an important place.”
Al-Ghamdi’s appointment follows the reshuffling of some government positions in the kingdom since 2011. Fahad al-Mubarak, previously a managing director at Morgan Stanley, took over as the central bank governor in December that year, while Abdulaziz Al-Helaissi from JPMorgan Chase & Co. became deputy central bank governor.
Mohammad Al-Sheikh, a World Bank executive representing Saudi Arabia, was named chairman of the market regulator in February. The kingdom will only open the bourse to foreigners “after intensive study and gradually,” and the regulator is seeking to boost institutional investments, he said in May.
The Tadawul, whose market value is close to that of South Africa’s bourse, has rallied 16 percent this year. That matches the advance of the Bloomberg GCC 200 Index (BGCC200) and compares with a decline of about 10 percent for the MSCI Emerging Markets Index.
“Being an ex-CMA executive will improve and increase the synchronization between market-related bodies,” Fadi Al Said, senior fund manager at ING Investment Management in Dubai, said by e-mail today. “This will hopefully set the ground for the opening of the market.”
The largest Arab economy has taken other steps in recent months to facilitate the change. In April, the market regulator announced a plan to issue credit ratings for local companies, and a month later it adopted a stock-price fluctuation limit of 10 percent for shares on their first trading day.
Saudi Arabia in June aligned its working week with GCC countries to span Sunday through Thursday. The move demonstrates the kingdom is “keen to have more overlap with the rest of the world when it comes to doing business,” Bell said.
Morgan Stanley (MS), Credit Suisse Group AG and Bank of America Merrill Lynch are among global banks that have set up offices in Riyadh as a hub for brokers covering the GCC region in anticipation the market will open up. MSCI Inc., whose gauges are tracked by investors managing about $7 trillion, last year resumed Saudi coverage and said it would consider including the nation in frontier or emerging-market indexes if it allows foreigners direct access.
MSCI in June upgraded the United Arab Emirates, the second-biggest Arab economy, and Qatar to emerging-market status. The index provider’s decision “puts additional pressure on Saudi Arabia to accelerate its qualified investor program and we now believe this is likely over summer,” Emad Mostaque, a strategist at Noah Capital Markets EMEA Ltd., said June 12.
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