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Sun 12 Oct 2008 12:41 PM

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Royal advisor urges action over Saudi bourse

Emergency measures called for after Tadawul hits new four-year low on Saturday.

Saudi Arabia should deploy emergency measures, such as buying into falling stocks or allowing share buybacks, to spare ordinary citizens losses from weeks of bourse declines, a royal adviser said on Sunday.

The Arab world's worst performing stock market closed on Saturday at its lowest level in more than four years amid concerns over the global financial crisis.

"Our leadership must start suggesting measures because we can't afford to leave things as they are. The government is concerned," Abdul-Rahman al-Zamil, a member of the Shura Council economic committee and also a former government minister, told Reuters.

Earlier on Sunday, Okaz newspaper quoted Zamil saying that he expected the government to buy into the falling local stock market and that this would be part of "urgent and exceptional" measures in line with those taken by other countries such as Japan, the United States and the European Union.

Zamil confirmed the Okaz report.

"Our government and financial authorities must take exceptional measures because the situataion is exceptional. We got stuck in a crisis we did not start ... Our economies are sound and all our firms are profitable," he said.

Saudi Arabia, an absolute monarchy that is also the world's largest oil exporter, has sought to make the stock exchange a platform for wealth distribution through a raft of initial public offerings, often at discounted prices.

"People and shareholders should not lose hope. Our government is like any government in the world and all governments have taken steps and measures, so our government must too," Zamil added.

He suggested that the government should spend 100 billion riyals ($26.7 billion) on buying high-yield stocks to "rescue" the bourse.

"These are my expectations as Abdul-Rahman al-Zamil," he said.

"What I suggest is a share buyback plan and for the government to start buying blue chips as did the United States ... and countries in the free economic world," he said.

Zamil said he would try to float these proposals when the council meets on Sunday.

The Shura Council's members are appointed by the king. Although its decisions are not binding, the Council has become a more active platform of debate and proposition over the past few years, encouraged by King Abdullah's calls for reform in the absolute monarchy.

The country boasts the largest equity market in the Arab world but it has encouraged a culture of retail investor speculation that has left serious, long-term investors sidelined for lack of information or confidence. (Reuters)

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