The flurry of changes to rules governing the kingdom's stock market continued in late March. The proposal by the Capital Market Authority (CMA) to reduce the par value of shares to SR 10 ($2.70) from SR 50 ($13.30) received government approval, the maximum daily share price fluctuation was revised and foreign residents were allowed to begin trading on the local bourse.
The CMA proposed the stock split in mid-March, following the share price crash affecting bourses across the Gulf. 'A change in the par value was long overdue,' says a Riyadh-based analyst. 'Positive things have emerged from the crisis. Opening the market to foreigners is also very wise, although ideally expatriates should also be allowed to invest in IPOs [initial public offerings].'The kingdom's foreign residents were permitted to trade on the secondary market from 25 March. However, the authorities have so far ruled out opening up IPOs to non-nationals. The split in the par value of shares is expected to increase liquidity and provide a psychological boost to investors.The CMA has also raised the ceiling on daily share price fluctuations back up to 10 per cent from 5 per cent. The authorities reduced the limit in late February in an attempt to control market volatility, but the move was widely blamed for fuelling the downturn (MEED 17:3:06, Cover Story).