Stock Split Mechanism Boosts Affordability and Liquidity for Saudi Companies
Investors in Saudi Arabia witnessed a surge in affordability and liquidity as 42 companies on the country’s benchmark index and parallel market took advantage of the nominal value split mechanism in 2023, according to official data.
Significant Momentum in Stock Split Operations on Nomu
The Capital Market Authority’s latest update highlighted the significant momentum in stock split operations on Saudi Arabia’s parallel market, Nomu. Last year, 24 companies, representing 37 percent of listed firms, implemented the measure.
Regulatory Flexibility Drives Stock Value Changes
Following the execution of the Companies Law and its Executive Regulations on Jan. 19, 2023, listed firms were permitted to split stock par values from SR10 ($2.67) to various lower options. This regulatory flexibility allowed companies to adjust their stock nominal values to better suit market conditions.
Enhancing Trading Volume and Accessibility
The stock split mechanism involves dividing existing shares into multiples to enhance trading volume and accessibility for investors, without impacting the company’s total market capitalization. This move aims to increase tradable shares and lower per-share prices to attract a wider range of investors.
Advancing Vision 2030 Goals
The Capital Market Authority plays a crucial role in advancing the goals outlined in Saudi Arabia’s Vision 2030, implementing measures to transform the Kingdom into a favorable investment destination. The recent growth in the sukuk and debt capital market, along with increased foreign investments, reflects the progress towards achieving these goals.
Global Recognition for Saudi Capital Market
In 2023, Saudi Arabia’s capital market received prominent global recognition, ranking first among G20 countries in the Board of Directors Index. This recognition underscores the Kingdom’s advancements in governance, market accessibility, investor protections, and overall market vibrancy.