Starting today (Saturday) the 6.5 million foreign workers residing in the Kingdom will be allowed to directly trade in Saudi stocks. But they will not be permitted to participate in initial public offering (IPO).
In an interview to Asharq Al-Awasat, the official said, The decision of allowing expatriates to invest in the stocks would not help much as the process remains to be a psychological factor to restore confidence in the market.
Al-Meferh also underlined that the International Chamber of Commerce will not take any part in monitoring the expatriates speculation in the stocks and suggested creating a special department to probe this process.
ICC Saudi Arabia is an ICC national committee. These national bodies comprise leading companies and business associations in their countries or territories. National committees shape ICC policies and alert their governments to international business concerns.
Al-Meferh anticipates that a specific ceiling will be fixed for the expatriates participation in the market.
The idea of allowing expatriates to trade in the stock market is not a new one since some expatriates were trading in the stocks under the names of Saudi citizens. Now they will openly speculate in their names.
According to Al-Meferh expatriates participation will not help boost the market. The problem is not unavailability of liquidity or lack of flow of cash but it lies on the non-existence of enough number of companies open for investment, he explained.
Whether the participation of the expatriates is meant to boost the market or just because the Kingdom joined the World Trade Organization (WTO) Al-Mefreh said, These are two different issues. It is a wise decision because all the people were looking for such a decision to bring stability to the market.
One of the major problems that may happen in future is the flow of hot money resulting from the fast entry and withdrawal by foreign speculator. This will definitely create great confusion and chaos in the market, he added.
There is a common feeling among the expatriates that they are being used as a tool to boost the market when in the past they were denied this privilege. Al-Meferh said, I precisely want to say those who fail to adopt themselves to the changes sweeping the world they will miss the train and get isolated, especially in this age of globalization. It is high time to free ourselves from the superiority complex toward the foreign workers.
Muferah said it will take a long time for expatriates to enter the market. The official expects only a handful of expatriates will speculate in the stocks. The market will rise tomorrow but will never reach the levels it witnessed in the two past years 2004-05, he added.