RIYADH, (Reuters) - A draft law to regulate the Saudi stock market, the biggest in the Middle East, has reached an advanced stage and might be issued before the end of the year, officials and analysts said on Wednesday, May 30.
"It will be a modern, transparent law that will enforce complete disclosures by listed companies," an official from the Saudi Arabian Monetary Agency (SAMA), the country's central bank, told Reuters.
"The law has passed through many channels already and we expect it to be finalized before the end of the year, God willing," he said.
Saudi Finance and Economy Minister Ibrahim al-Assaf said on Tuesday that preparations for the capital market law, put on and off for years, has reached an advanced stage.
"It is now under discussion in the Supreme Economic Council," he added, referring to the body chaired by Crown Prince Abdullah, the main guiding force behind recent economic reforms in the conservative oil-rich kingdom.
Saudi officials hope a more efficient and transparent stock market would encourage more listings and raise quick capital to finance some of the major projects under way.
"The lack of such a law has hampered a number of companies from listing themselves on the market," said Beshr Bakheet, managing director of Bakheet Financial Advisors company.
He said some 20 big companies make up around 80 percent of total market capitalization estimated at around $60 billion dollars.
Only 75 companies are listed on the Saudi stock market, some 20 percent of listings in other comparable markets.
"This means that opportunities are very limited to invest here," Bakheet said. "This partly explains the reason behind the recent Saudi capital flight."
Economists estimate that Saudis hold between $500 billion and $650 billion abroad, the bulk of which is in U.S. and European funds.
Saudi Arabia does not have a stock exchange. Electronic trading of shares on the market is controlled by SAMA.
Only individuals and companies from Saudi Arabia and its Gulf Arab neighbors are allowed to trade directly. Foreigners can only invest through Saudi funds.
By Rawhi Abeidoh
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