The Saudi Parallel Market in 26 Months ... Strong Launch and Limited Activity

Amazon Special Report:

A new tool that the Saudi Capital Market Authority has sought to increase the momentum for financial markets and attract foreign investment, it is the parallel market Nomu, which was launched on February 26, 2017.

The Parallel Market (Nomu) is an alternative platform for trading shares, on more flexible terms compared to the official market, in terms of market value, offering percentage, and number of shareholders.

Investment in the parallel market is limited to only qualified investors, and companies listed in parallel can move to the main market after two years, and achieve the requirements of the main market.

The CEO of Tadawul, Khaled Al-Hossan, said during the launching ceremony of the parallel market, Nomu, that this market represents an essential building block for building a developed financial market that is open to the world according to the Kingdom's Vision 2030. < / p>

More flexible terms

Parallel listing conditions include a minimum market value of 10 million riyals, compared to 100 million for the official market, and there is no requirement for the company’s profitability to be listed in parallel.

The conditions also include a minimum market value of 10 million riyals, compared to 300 million riyals, for the official market, and 20% of the capital offered, compared to 30% for inclusion in the official market.

The conditions also include that the number of shareholders from the public be no less than 50, compared to 200 shareholders in the official market, and the daily fluctuation rate is 20%, compared to 10% for the official.

The launch of Quba

The parallel market witnessed a strong start in the first session, where it managed to rise to the maximum level of 20%, with great activity, the market did not witness after that.

According to a statistic carried out by Namazon, the parallel market index recorded its highest level at 6,036.75 points in the first session of March 2017, and it was the lowest level at 2,310.3 points, by the end of the October 23 session 2018.

Al-Mawazi achieved its highest daily gains in its first session on February 26, 2017, while the highest daily losses were by 6.55%, in the August 13, 2018 session.

Negative Outcome

The parallel market index lost about 26% of its value during that period, equivalent to 1,314 points, to fall to 3,685.74 points, and the market opened its trading at the level of 5000 points.

At the level of the monthly performance of the parallel market, during 26 months, it recorded gains in only 8 months compared to 18 months of decline.

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