Nomu listings set to double after Tadawul unveils major changes: Riyad Cap

The number of listings on the Saudi Stock Exchange's (Tadawul) Nomu Parallel Market is expected to double in the next 12 months after the new rules come into effect, Muhammad Faisal Potrik, head of research at Riyad Capital, told Argaam on Thursday.

Tadawul on Wednesday announced a series of significant measures to boost liquidity and listings on the Nomu, which it said would be implemented over the next two quarters.

Read: Tadawul unveils major changes to Nomu Parallel Market

Currently, the number of listed companies on Nomu stands at 10.

"Overall, the measures announced would primarily help to bring in new listings to the Nomu market, thus develop an alternate fundraising avenue for the SME sector, as well as increase market volumes," Potrik stated.

According to the Riyad Capital analyst, the direct listing on the Nomu without an initial public offering (IPO) is likely the most important change in the first phase that will speed up the listing process and avoid IPO-related costs.

The listing of closed-end funds in the market and independent research on the listed stocks in the second phase will also encourage liquidity and market efficiency, he noted, advising investors will need to be prudent in picking the right stocks since financials will be reported semi-annually. At present, companies have to report statements on a quarterly basis.

While emphasizing that the launch of Nomu was aimed at the development of the SMEs – a sector which is vital for the Kingdom's economic growth and diversification, Potrik believed that the new measures will encourage more family-owned business to seek public funding.

“Investors will need to carefully evaluate the companies on fundamentals to avoid getting their fingers burnt,” he warned.

Earlier this year, Argaam reported that the Nomu Parallel Market closed 2018 down 20 percent (- 619 points) at 2,521 points, compared to 3,140 pts at the end of 2017.

Write to Parag Deulgaonkar at parag.d@argaamplus.com