03/07/2010
Frozen of interest imposes «Silence» on instruments trading for 50 days
After recording the worst performance in June 2008
Traders tracking Saudi stock prices, A financial analyst explains the current freeze in the instruments market to three main reasons, most notably the nature of trading instruments.
The total freeze on the interest rates of the Saudi market about year ago had imposed a silence on the trader's transactions in the Instrument and bond market in last June lasting for 50 days, a record number by the secondary market since its starting in June 2008.
The last three transactions amounted more than the total traded amount of five million riyals carried out in the trading session on 04/05/2010,one implemented by the Saudi Basic Industries Corporation SABIC''.
According to the financial analysts, the lack of fluctuation in interest rates or the "Cyber", which left in its place for more than 12 months, forming a major lack in the instrument market that depend on interest rates.
According to the financial analysit, Mohammad Al-Omran, who said for "Al-Eqtissadiyah" The current impasse on the instrument market, is due to the three main reasons; most important is the nature of instruments trading, which are weak and slow with distant periods of time.
Following are more details:
The total freeze on the interest rates of the Saudi market about year ago had imposed a silence on the trader's transactions in the Instrument and bond market in last June lasting for 50 days, a record number by the secondary market since its starting in June 2008.
The last three transactions amounted more than the total traded amount of five million riyals carried out in the trading session on 04/05/2010,one implemented by the Saudi Basic Industries Corporation SABIC''.
According to the financial analysts, the lack of fluctuation in interest rates or the "Cyber", which left in its place for more than 12 months, forming a major lack in the instrument market that depend on interest rates.
According to the financial analyst, Mohammad Al-Omran, who said for "Al-Eqtissadiyah" The current impasse on the instrument market, is due to the three main reasons; most important is the nature of instruments trading, which are weak and slow with distant periods of time.
Al-Omran said:''all listed issues on the market today are traded under the nominal value, because as it was included at a time when interest rates were high, making them unattractive except for the insertion of the last Saudi Electricity Company Electricity''.
He also added that bond or instrument prices in the market is based on the interest, as when the interest rate is low, it will activate the instrument.
Furthermore; Al-Omran has insured that keeping the interest rates at the current levels will not help to activate the bond market, pointing out that the opportunity now is good for those wishing to issue more of the instruments and listing them in the Saudi market.
For their part, observers of the instruments market believes that the absence of traders in the Saudi market, which includes seven versions, three of them belongs to the Saudi Basic Industries ''SABIC' 'and three for Saudi Electricity Company and one for Saudi Hollandi Bank, which is worth more than SR 30 billion during the last period.
However; the instrument market in Saudi Arabia recorded the first deal of 2010 in 12 January, on the latest version of Saudi Basic Industries Corp (SABIC 3) by two transactions, with marginal profits prevented among the best presentation requests.
According to economic analysts, the market which was launched recently with updated financial tools as instruments, still need more time for building its infrastructure.
Economists have agreed upon the difference of the bond market nature from the stock market, as they need longer periods of time, as well as the process versions pass through longer conditions and procedures, adding that the infrastructure is still incomplete as there is no credit rating companies, and the external evaluation costs more.
