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Tue 5 Apr 2016 09:36 AM

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Saudi Arabia outlines plan to double the size of its stock market

Head of Capital Markets Authority tells Bloomberg that Tadawul will increase to 250 firms in 7 years’ time

Saudi Arabia outlines plan to double the size of its stock market
Saudi Stock Exchange. (FAYEZ NURELDINE/AFP/Getty Images)

Saudi Arabia is planning to almost double the size of its stock market as part of ambitious plans to diversify the kingdom’s economy away from oil, the head of the country’s capital markets regulator has said.

Speaking to Bloomberg, Capital Market Authority chairman Mohammed Al Jadaan said the Tadawul will increase to 250 companies from about 170 now, while its market cap would grow to match the size of Saudi gross domestic product (GDP) in seven years’ time.

The index’s current market cap is $380 billion, about 57 percent of GDP.

The plans include an initial public offering of as much of 5 percent in Saudi Aramco, the world’s largest company. The bourse is also hoping to develop equity and debt markets by adding new listings and products, and to foster derivatives trading, the debt market and set up real estate investment trusts (Reits), Al Jaadan told the newswire.

The chairman said that new listings would come from a combination of privately owned companies as well as the government’s plan to privatise several state-owned firms.

He added that the CMA would also be working towards making it easier for foreigners to invest in the local equities market. After opening up to foreign investors in June, the CMA has handed out 11 licences to overseas institutions to trade on the market.

Other plans announced last week by the kingdom’s deputy crown prince, Mohammed Bin Salman, include budgetary measures that will raise an extra $100 billion a year by 2020, and the formation of an estimated $2 trillion sovereign wealth fund – the world’s largest.

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