Saudi's Alinma continues surge in day 2 trading

SHARE SOAR: Closed up 9.4% on Wednesday after surging 60% in the previous session. (Getty Images)

Shares of Saudi Arabia's Alinma Bank advanced on Wednesday after surging 60% on their first day of trading on Tuesday, making the lender the country's seventh-largest bank by market value.

The stock closed up 9.4% at 17.50 Saudi riyals ($4.67).

Founders of Alinma, which operates according to Islamic law, raised 10.5 billion riyals in April in Saudi Arabia's biggest initial public offering (IPO).

"This is usually how IPOs perform in Saudi as a way for investors to move around positions," said Marwan Shurrab, senior trader at Shuaa Capital investment bank in Dubai.

"Sentiment of the stock is strong and we could see yet another 10% on Saturday," he said. The Saudi market, the Arab world's largest, is closed for the Thursday, Friday weekend.

Investors offered 18.3 billion riyals, or 74% more than the founders were seeking when they sold 1.05 billion shares at 10 riyals each, equivalent to 70% of the company. The IPO was only open to Saudi individuals.

On Tuesday, the stock closed at 16 riyals after touching 18 riyals.

The bank boasted a market capitalisation of 26.25 billion Saudi riyals or $7 billion based on Wednesday's closing price.

Among other tenets, Islam bans the payment of interest, equating it with usury, and instead offers investors a share of profit or loss. Investments of this nature comply with an Islamic law called sharia.

Saudi Arabia's economy, the Arab world's largest, is expanding on a near seven-fold surge in oil prices during the last six years. The kingdom is the world's largest oil exporter.

Alinma plans to start operations in the second half, opening 15 branches across the country of about 25 million people

Demand for financial services that comply with Islamic law is growing at twice the rate of that for conventional services, with the value of sharia-compliant assets worldwide at $700 billion, according to Moody's Investors Service. (Reuters)

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