CMA decision allows firms to split shares five to one
The Saudi Capital Market Authority recently revealed that it would allow firms to split their shares five for one, and to change the nominal share value of all joint-stock companies listed on the Saudi stock exchange (Tadawul) from SR50 to SR10.
The splitting will increase liquidity and stock movement, while allowing small investors to purchase shares in leading companies that have a high market value.
The announcement came on Tuesday, according to <i>Arab News</i>, and comes at the heels of an earlier decision allowing non-Saudi residents to trade directly in the stock market.
Analysts believe that with large number of IPOs this year, these were positive moves for the market. They added, however, that more regulations need to be implemented.
“The splitting will make the market value of the shares more affordable for people especially small investors, thus expanding the base of investors, which will increase the demand and eventually increase the market value of the shares,” said one analyst on the condition of anonymity.