Saudi Shura Council called on Tuesday for a study of the effects the Aramco IPO will have on the local stock market to protect it from the concentration of liquidity in the company.
During a meeting, chaired by Deputy Chairman Mohammed al-Jafri, the Council called on the Capital Markets Authority (CMA) to develop the mechanism for compensating the affected shareholders as a result of violations of the financial market system and its regulations.
The Council adopted its decision after listening to the Finance Committee's view on the comments and opinions of the members on CMA's annual report for the last financial year.
In its decision, the Council called for intensifying the Authority's efforts to raise investor confidence, bolster opportunities to attract investments and stimulate the owners of family businesses by clarifying the financial benefits of listing their companies in the market.
The Shura stressed the importance of identifying the effects of low cash in the capital market and reducing its impact on the future activity of the financial market and studying the effects of Aramco IPO in the local stock market.
The Council endorsed the Committee's view that the size of Aramco's offering, which is 5 percent of its shares, represents the largest IPO in history in terms of financial value.
The local market is not expected to absorb an initial offering of this size, confirming that foreign investors entering the financial market will contribute in introducing new liquidity into the economy that could be channeled to stimulate growth in other promising sectors.
An additional recommendation by Council member Khalid al-Aqeel stating that "Saudi companies and individuals are entitled to the largest share of the IPO in Saudi Aramco" was not approved.
The Council also called for the Institute of Public Administration to design and implement programs to train public workers involved with the implementation of the "National Transformation Program 2020" and the realization of Vision 2030.
