02/01/2014
Instruments and bonds Market fall in Saudi Arabia in 2013
Market instruments and bonds ended in 2013 retreating about 0.12 % of trading in the market reduced to 227 million compared with 446 million in the previous year by 49 per cent. During the seven-year deals only compared to 13 deals the previous year. And the longest pause in the market about five months where any trades. The previous year saw the suspension of trading instruments, Saudi basic industries Corporation SABIC ' third version ' of five billion riyals, with effect from 15 April 2013. It came off with the approval of the capital market authority, the request of the Saudi basic industries Corporation purchase recovery instruments from its entire version 3, proceeds of the higher interest rate, making it a better choice than term deposit as well as Murabaha. Ranged between instruments revenues 1.9 % to 2.9 % exporting companies vary in their activities, so has the market for utility and other industrial companies.
Market interest is still weak; especially government bonds interest was issued to reduce public debt, the bond market up hundreds of billions dropped to 75 billion. Despite the decline in the bond market because if the bonds go to market and only traded in the market. The lack of interest in the market is due to the high risk in comparison with bond instruments, as well as the lack of credit rating agencies in order to classify them in terms of risks and solvency of the company and other credit aspects of interest to the investor. Finally revealed Mohammed Al-Sheikh, head of the Saudi capital market authority, the authority will be issued soon, stressed that it strengthens bonds in the financial market. And the credit rating agencies is important for further versions, only the largest companies with overseas credit rating acquired the confidence of investors. Market factors lack of awareness among some investment. The sukuk market is the preferred choices of savings as they give a higher return than interest rates and less risk than other investment channels including stock.
All versions have succeeded in attracting liquidity upon subscription, covered these versions of instruments with more than 100 per cent. However, trading is weak insertion, abbreviated listing major companies, with trading only seven versions. The sukuk market is one of the channels of financing for corporate debt; with banks to the maximum allowed for lending companies you will find an option in the market. Especially companies that have the option the rights issue to raise capital.
