Saudi investors rushed to invest in the Saudi market after the government decided to allow foreigners to trade in the market. The index registered its highest rise since 2006, up 5.2%.
The move to allow foreigners to trade in the market is based on criteria known as a swap agreement, which allows trading without ownership based on indices performance or interest rates. The agreement doesn't give foreigners direct ownership of shares, rather through brokers only.
Foreigners have no right to vote in the general assemblies, a move seen by many as restrictive, but some analysts, including Haitham Urabi from Shuaa Capital, believe that it's a good step toward a full liberalization of the market.
Strong response by market
Saudi investors rushed to buy shares in a pre-emptive move to purchase shares before foreigners can start trading.
The index rose up by more than 5%, its highest since November 2006, while prices of 118 listed firms witnessed a rise against 3 declining firms only.
The trading value has also jumped by 100% to SR8.7bn compared to less than SR4bn previously.
Leading shares, including banks, petrochemicals and telecom have seen unprecedented rises as many believe that foreign investments will focus on these three sectors.
Samba had the highest rise, up by 8.3%, followed by Saudi French 8.1%, and Al Rajhi 8%, while Sabic rose by 6.4% to SR133.
Mobily, up 9.6%, led the telecom sector, followed by Zain, which gained 3.2%, and STC, which rose 1.4%.
Other sectors, including energy, agriculture, investments, construction, hotels and transportation, also had strong rises.
Maha Kenz, from Al Fajr Financial Securities, says that the swap agreement will regulate the market and boost trading and will also limit speculation in the market.