The IPO will be the latest demonstration of the government’s political use of the stock exchange. It views the Tadawul not as a reflection of the health of the domestic economy but as a way to distribute its mounting oil wealth.

Share issues are targeted at lower-income retail investors, and high net worth individuals remain barred from participating in the primary market. However, this could change.

Despite the market downturn, there has been no let-up in the issuing of IPOs. Some 60 companies are expected to list in the next two years, with the 10 largest raising more than $22,000 million between them.

Some 23 issues have closed in the kingdom so far in 2007. The most active sector is insurance, with 13 companies’ issuing. Together, the listings will consolidate the bourse’s position as the regional giant, which today represents 40 per cent of GCC market capitalisation.

However, the dislocation between the performance of the bourse and the local economy is still stark. The Tadawul All-Share Index (Tasi) is down 57 per cent from its peak in March 2006, even as the price of crude oil approaches $100 a barrel.

However, the index is not expected to fall further and is up 13 per cent since the beginning of 2007, at 9,011 points. Brad Bourland, chief economist at Jadwa Investment, forecasts the Tasi will rise by 44 per cent to 13,000 by the end of 2010.

The composition of the index is under review and may be re-weighted to more accurately measure the stock performance of floated shares rather than the entire market capitalisation of a listed company.

Average daily turnover in October was just less than $2,000 million. Large-cap stocks on the bourse are valued reasonably, but small stocks are expensive and speculative.