As the Tadawul All-Share Index (TASI) reeled wildly in May and June, initial public offerings (IPOs) were essentially put on hold for fear of worsening the volatility some by the companies themselves worried about a poor response, others at the behest of the regulator to prevent sucking liquidity from the secondary market.

Analysts have long stressed that a broader range of quality stocks could have prevented the excessive overheating and March's devastating crash in the first place and their warning is being heeded. In mid-July, the CMA announced the date of the next four IPOs. As expected, Emaar The Economic City, the project company for the planned $26,600 million new city near Rabigh, is first in the queue, with its shares to be offered in late July. This will be followed by IPOs of Red Sea Housing Services, Saudi International Petrochemical Company (Sipchem) and Al-Hokair (see page 30).

'The CMA's announcement of the IPO timetable is explicit in the fact that it wants investors to have access to a greater number of quality shares,' says one analyst. 'But the announcement of the IPOs meaning that the companies' prospectuses are more-or-less approved so far in advance is very unusual and not necessarily a good thing. In a few months, the condition of a company could change considerably.'

Investors also gripe about weak corporate governance rules for listed companies. Here too, the CMA is taking action: in early July a consultation paper was published on the issue. Among the matters covered are: the separation of the role of chairman from that of chief executive officer, managing director or general manager; the proportion of board members who should be non-executive; the barring of officials from sitting on the board of more than five joint stock companies; and rules governing composition of the audit committee.

The secondary market continues to be volatile, although without the wild swings seen earlier in the year. The TASI's most recent peak, for example, was 13,509 points on 2 July, whereas on 10 July it had sunk to 12,292. 'Instability is normal during [second-quarter] earnings season,' says Khan Zahid, chief economist and vice-president at Riyad Bank. 'It also means that we haven't seen trading volumes fall for the summer yet, as investors are awaiting the results.'