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Saudi stock and real estate markets: What's going on?



Sami Al-Nwaisir

Published — Saturday 26 May 2012

 

Author: 

Sami Al-Nwaisir

Sat, 2012-05-26 (All day)

The talk of the town right now is whether the stock market is overvalued and whether the real estate market is on the verge of collapse.
Although no one has a crystal ball to predict the future accurately, both markets are interrelated, yet currently moving in different directions.
The stock market has risen around 18 percent to 7,600 points since the beginning of 2012 with an average daily trading value of SR 12 billion.
Observers argue that the run-up in stock prices has a long way to go since the index remains far below its highest point of 20,536 in February 2006.
Looking back, we can see that this was a bubble created by unrestrained optimism and did not reflect the intrinsic value of publicly traded securities. Compared with its historic high, the market now appears to be in a slump.
When one takes an average of the highest and lowest index prices in a year 5,795 (i.e. middle 13,166 points), the index is still below the average by 42 percent. But is this a bad thing?
Actually, stock prices are very low and attractive.
If we also consider the P/E ratio of 13, we can see that the valuations in the Saudi stock market compares quite favorably to 19 back in 2005.
Further, a P/E ratio of 13 and yield to dividend 3.71 percent is quite attractive when compared to other emerging stock markets.
In terms of turnover and trades, some people may believe that it is high when the traded value varies from SR 9 to SR 20 billion daily.
But this is not true, because the value includes all trades when, in reality, the indicative value is just the half that number, i.e., between SR 4.5 and SR 10 billion.
Stock market volume can be turnover amounts or change in portfolio asset allocations, still quite low.
Also, if we compare traded value with overall market value, we find that it is only 87 percent versus 430 percent in 2006 when the index reaches its highest point.
Therefore, the current value of the Saudi stock market is below its median, and with low P/E ratios and trading volume, it has a long way to go in order to attain the median before we can say there is a bubble.
By contrast, the Saudi real estate market has experienced severe declines, as much as a 30-40 percent drops in some areas of the country.
Now, people are warning of a complete collapse in the real estate market, which has caused many to move their money out of real estate and into the stock market.
Again, this is not true and we can even say that there is an unjustifiable misconception.
Of course, some hesitancy is understandable in view of recent price corrections and the experience of certain speculators.
However, one must remember that the total value of the real estate market is more than SR 2 trillion, which cannot be easily affected by the exodus of 10 billion moving into the stock market.
If we assume that the daily traded value of the stock market is SR 10 billion and if we consider that the government has pledged to inject SR 250 billion over the next five years, we can see that the net effect is positive for real estate investments.
The amounts entering the real estate market (cash inflow) is far greater than the amount leaving the market (cash outflow).
We are simply experiencing a temporary price correction and market cool down.
As the population grows, more and more real estate projects will be required to provide housing and commercial goods for Saudis.
The Ministry of Housing has allocated SR 250 billion for real estate projects over the next five years.
There also is a real estate fund of SR 40 billion set aside for loans as well as many new regulations like the mortgage law in the pipeline.
All these factors will invariably cause an increase in real estate prices and more real estate development rather than real estate speculations in many places, especially the recession-proof ones like Makkah and Madinah.
Finally, the Kingdom is enjoying an economic boom with more than SR 2 trillion in reserves, which will positively affect both the stock market and the real estate market.
The current economic trend confounds the assumption, which says that if the stock market flourishes, the real estate market will collapse and vice-versa.
In fact, both markets are experiencing unprecedented growth and investors have become more knowledgeable today as compared with the pre-2006 period. Investors now know how important it is to diversify their investments and invest for the long term, not for the short-term gain.
We must thank Almighty Allah for the wellbeing that Saudi Arabia currently enjoys, which seeks to bring prosperity to all its citizens.
Sami Al-Nwaisir is chairman of the board
Al-Sami Holding Group. sami@alsamigroup.com

قطر - القمة العقارية

المتحدثون

الدكتور سامي النويصر

رئيس مجلس إدارة مجموعة السامي القابضة في السعودية والتي تمتلك شبكة عالمية تغطي ثلاثة أنشطة رئيسية: شركة السامي للتطوير العقاري والتجارة والتمويل.
هذا علاوةً على أنه الرئيس التنفيذي لشركة السامي للبحوث والدراسات المالية.
مؤسس مركز موثي فاونديشن سنتر.

رئيس سان جلوبال في الولايات المتحدة وأوروبا.
عضو مجلس إدارة مركز إجادة للتدريب، ومكاتب المحاماة LKAN، وشركة الأوقاف الإسلامية وغيرها من الشركات المعروفة.
كاتب ومعلق في الكثير من القنوات الإعلامية على التلفزيون والصحف ومتحدث ومشارك في جلسات النقاش حول الاستثمارات والمشاكل المالية والعقارات.
مرجع للمصارف الدولية مثل باركليز وبيكتيت وغيرها.

مستشار حول هياكل الشركات والاستثمارات بين كندا والسعودية "Unifore".
القائم بتطوير مشروع مشترك بين البنك الأهلي التجاري وإف دبليو يو لتطوير التأمين الإسلامي "أهلي تكافل".
رئيس لجنة الوساطة الدولية واللجنة الإستراتيجية لنظام إدارة الشركات في البنك الأهلي التجاري.

مبتكر الحلول المالية في البنك الأهلي التجاري للوساطة الدولية والتجارة عبر الإنترنت، وحلول الامتثال، والتداول الشبكي، وهياكل الحسابات والاستثمارات.
رائد في تقديم القروض المشتركة للفرص الاستثمارية في مشاريع التطوير العقاري داخل السعودية وغيرها من الأسواق.
محاضر حول الاستثمارات الدولية والأسواق المالية في المعهد المصرفي (جزء من مركز تدريب البنك المركزي السعودي).

مساعد المدير العام المعني بشؤون CMI في الذراع الاستثماري لشركة سامبا بأصول تقدر بأكثر من 3 مليار دولار.
رئيس ومؤسس إدارة النقد في سامبا واستحدث نظام الفوترة والسداد بأصول تقدر بأكثر من 15 مليار ريال سعودي.
يمتلك خبرة في العمل مع فريق آي دي إس في الولايات المتحدة الأمريكية وإدارة أصول تقدر بقيمة 73 مليار دولار أمريكي.
شارك في تأسيس شركة حلال لتوزيع المواد الغذائية والمنظفات في المملكة العربية السعودية.
رئيس نادي الاقتصاد في جامعة توليدو بالولايات المتحدة الأمريكية.

عضو جمعية الإدارة المالية في ولاية فلوريدا، وجمعية الاقتصاد السعودية.
خبير تخطيط مالي مسجَّل (سلسلة 7) في الأوراق المالية والتأمين بالولايات المتحدة الأمريكية من جانب حكومة الولاية.
حاصل على رخصة من معظم الأسواق المالية في الولايات المتحدة الأمريكية "قانون تنظيم الأوراق المالية بلو سكاي".

درجة الدكتوراه من إحدى أبرز جامعات المملكة المتحدة وهي جامعة ميدلسكس في لندن مع أول مرتبة شرف في الاقتصاد المالي.
درجة الماجستير من جامعة توليدو بولاية أوهايو في الولايات المتحدة الأمريكية في الاقتصاد المالي.

درجة البكالوريوس من جامعة توليدو بولاية أوهايو في التمويل "الأوراق المالية الاستثمارية واقتصاديات الشركات".

القروض الاستهلاكية تهدد الأفراد بالديون

• الإثنين 16/06/1433 هـ
• 07 مايو 2012 م
• العدد : 3977

اعتبر أساليب البنوك تناقض توجه «مؤسسة النقد».. خبير مالي:

القروض الاستهلاكية تهدد الأفراد بالديون

 حامد العطاس (جدة)

 

حذر الخبير الاقتصادي والمالي الدكتور سامي عبدالعزيز النويصر من توسع البنوك في تقديم قروض استهلاكية في المملكة والوصول بها إلى 219 مليار ريال وبنسبة نمو بلغت 470% على مدى 10 سنوات، مشيرا إلى أن ذلك يؤدي إلى تفكك اجتماعي بسبب إغراق الأفراد في الديون، وإشغال الناس والمحاكم بالقضايا وإيجاد تفاوت طبقي في المجتمع.
ورأى الدكتور النويصر أن التوسع في القروض الاستهلاكية يناقض توجه الدولة الساعية إلى رفاهية المواطن وانحسار الدين، مؤكدا أن المملكة تملك حاليا من الاحتياطات المالية ما يجعلها الأعلى على مستوى الفرد.
وشدد على أهمية إنهاء البذخ والإسراف والصرف التفاخري، الذي ـ على حد قوله ـ تراهن عليه البنوك وتبني عليه استراتيجياتها من السلع المالية، ومنها على سبيل المثال التوسع في قروض الأفراد.
واصفا تبرير العاملين في القطاع البنكي بأن نسبة الدين الاستهلاكي لديهم لا يعادل أكثر من 11% من الدخل القومي بـ(غير مقنع).
وقال: قد يدعون أيضا أن نسبة تعثر الديون هي الأخرى متدنية وقد تصل 1.3%، وقد يتذرعون بأنهم غير الدول، مثل أمريكا، لأنهم لم يتوسعوا بعملية الدين وسلعه، أو قد يقولون أن مؤسسة النقد منذ عام 2006 وضعت أنظمة صارمة بخصوص التوسع في الإقراض الشخصي، لكن جميع تلك التبريرات غير مقنعة، مرجعا بلوغ نسبة التعثر وعدم السداد 1.3% إلى أن البنوك لا تسقط الدين ولو بعد فترة من الزمن.
وأضاف: بنوكنا مستفيدة من النظام الغربي ومنهجيته، على الرغم من أن النظام الغربي يسقط الدين في حال تعثره إما بعد 7 سنوات أو 10 سنوات، وخلالها يحرم الشخص من حق الائتمان، بينما في بنوكنا يظل الدين في مركز المعلومات الائتمانية التابع إداريا للبنوك ما عاش الفرد، بغض النظر عن الفترة، فمن الطبيعي أن تكون نسبة التعثر متدنية، وواصفا أساليب تحصيل الديون التي تنتهجها بنوكنا بـ(البشعة)، وتكاد تكون دون ضوابط، ملمحا إلى أن البنوك تطلب الحصول على ضمانات مبالغ فيها وتستطيع أن تفعل ذلك بعملية شبه احتكارية، وتضاعف رأس مالها من صافي الأرباح كل سنتين بطريقة تكاد لا توجد في أي دولة أخرى. وتابع: فيما يتعلق بتدني نسبة القروض إلى مبلغ 219 مليارا، ما يعادل نسبة 11% من الدخل القومي، نقول إن هذا الكلام مردود على قائله، خصوصا أن المملكة تعيش طفرة اقتصادية كبيرة منذ 2005 حتى تاريخه، ونرى التناقض في وصول نسبة ديون الدولة تقريبا 6 في المائة من الدخل القومي وهي في تناقص وانحسار مستمر، بينما على النقيض نجد أن نسبة نمو إقراض الأفراد الاستهلاكية في نمو خيالي ومزعج ومربك للمجتمع والاقتصاد الوطني بعد أن وصلت 470% على مدى 10 سنوات، جازما أن نسبة النمو هنا هي الأعلى عالميا وأن أكثر من 86% من المواطنين على قائمة التأخر في السداد (سي لست) و(البي لست)، إضافة إلى أن أكثر من 60 ألف مواطن على قائمة المتعثرين وقد يحالون إلى السجون.
وزاد النويصر: البنوك في تلك الفترة التي شهدت الارتفاع في سوق الأسهم حتى 25 فبراير 2006 عندما كان المؤشر 20635 توجه الأفراد وبتشجيع من البنوك بالتوسع في الإقراض بالأسهم بنسبة 40% من دخل الفرد، ما حدا بمؤسسة النقد أن تتدخل في بداية تلك السنة يناير 2006 وتقرر ألا تتجاوز نسبة الإقراض 33% من إجمالي الراتب، والمتقاعدون 25% ولفترة محدودة، لافتا إلى أن هذه الجزئية التي لا تغطي حماية كافية للفرد تحايلت عليها بعض البنوك واتبعت أسلوبا جديدا وهو تسديد القرض بالقرض وتمديد فترة السداد بسنين حتى تحقق مزيدا من الأرباح البنكية، مبينا أن سداد الدين بالدين أسلوب خطير وضار.
وطالب الدكتور النويصر البنوك بالكف عن إغراق المجتمع في الديون من خلال الترويج للقروض الاستهلاكية التي من شأنها إيجاد تفاوت طبقي، مشددا على أهمية إعادة صياغة جميع الأنظمة والرقابة المالية المبنية على الدين، وتشجيع ثقافة الادخار والاستثمار.

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Saudi equity market cap falls to SR 1.48 trillion in April



 

Author: 

Khalil Hanware | Arab News

Sat, 2012-05-05 (All day)

JEDDAH: After a stellar performance in the first quarter of this year, the Saudi stock market failed to maintain the positive momentum in April.
At the end of April the Tadawul All-Share Index (TASI) closed at 7,558.47 points, down 276.68 points or 3.53 percent over the close of the previous month, according a monthly report for April by Tadawul available on its website.
However, on an YTD basis the index registered a positive increase of 17.77 percent (1,140.74 points). The report said highest close level for the index during the month was 7,930.58 as on April 3.
Paul Gamble, chief economist and head of research at Jadwa Investment, said: The dip in the TASI in April was not surprising after the strong gains over the previous few months and was driven mainly by investors taking profits after the recent share price rises.”
However, Gamble added: "Weaker global markets also contributed; some economic data disappointed and political uncertainty has increased in the euro zone."
He also said first quarter results of listed companies, issued during April, were reasonable.
The Tadawul report said total equity market capitalization at the end of April reached SR 1.48 trillion ($395.03 billion), declined by 3.78 percent over the close of the previous month.
The total value of shares traded for the month of April 2012 reached SR 270.09 billion ($ 72.02 billion), fell by 15.41 percent over the previous month.
The total number of shares traded reached 12.69 billion shares in April compared to 15.02 billion shares traded for the previous month, decreasing by 15.52 percent.
The total number of transactions executed during April 2012 reached 5.15 million compared to 5.61 million trades for the month of March 2012, falling by 8.26 percent.
Commenting on Tadawul's April performance yesterday, Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: "The main reason for Tadawul's seeming underperformance is doubtless the uncertain global bankdrop, above all the situation in the euro zone. This has directly hit the market due to worries about oil demand erosion and the effects of this on the oil price, especially at a time when some of the political risk considerations appear to have subsided somewhat."
Although, he said, the banking sector is well capitalized, the European risks naturally translate into worries about disruptions, bad loans, and tighter market conditions.
"Overall, the performance of Tadawul was not bad and if anything, it should assuage some the fears about a potential bubble," Kotilaine said.
Nonetheless, he said: "The return of volatility clearly highlights the interdependent world we live in. This remains a risk factor also going forward as the euro zone situation will clearly defy any near-term solutions."
April was a month of slowdown with cooling off after reaching the highest point of 7,900 since the start of the year, said Sami A. Al-Nwaisir, chairman of the board, ALSAMI Holding Group. This meant that the index lost approximately 6 percent, which brought the net performance to 17.7 percent. There are some main reasons for that retreat in the index: First, Profit taking after achieving high performance of nearly 24 percent. Second, end of the first quarter for most companies, which meant some change to assets allocations and positions based on new views. This is no surprise due to the fact most players in the market are traders rather than investors. Also, the market features 93 percent individuals rather than institutions. Third, this is very important since the issuance of a serious warning by Custodian of the Two Holy Mosques King Abdullah not to indulge in market manipulations or violate the market rules. This has sent strong waves to some serious players in the market.
Meanwhile, the GCC markets were also down in April, losing 3.2 percent following an increase of 6 percent in March and 7.6 percent in February, Kuwait Financial Centre (Markaz) said in its new report.
Qatar, which lost 1.2 percent in April, was the only GCC market with a YTD loss. Oman remained in the green, and witnessed a 3.2 percent gain last month.
Volume was down 25 percent in the GCC and value of traded shares also decreased 18 percent to $77 billion. Bahrain (-70 percent) witnessed the largest drop in liquidity over the month and Saudi Arabia, which accounted for 91 percent of GCC's total value traded, registered an 18 percent drop.

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The important role of charitable organizations

  

Sami Al-Nwaisir

Published — Thursday 3 May 2012

 

Author: 

Sami Al-Nwaisir

Thu, 2012-05-03 00:08

It is often mistakenly believed that charitable organizations and their volunteer activities are unimportant and of little consequence to a country’s economic system, but nothing could be further from the truth.
In reality, charitable activities make a vital contribution to the economic, social and political sectors of a nation.
In fact, the role of charitable organizations and volunteer work is no less important than the roles of the public and private sectors.
Charities provide essential services that positively impact the lives of citizens, such as building hospitals, schools, orphanages and religious centers.
Secondly, charitable organizations are a vital partner to the government in many aspects, including personal empowerment and training, fighting poverty, combating social diseases such as drug abuse, and attempting to narrow the deep divide between the rich and poor.
Charitable and volunteer work is also the safety valve and supporting pillar for a country’s security due to the preventive roles it plays, especially in fighting extremism, radicalism and criminal acts against humanity.
Such work is especially targeted at those who are particularly vulnerable to crime owing to their poverty and harsh conditions.
In addition to their social role, charities are also an investment. As such they require professional management and administrative organization that are governed by corporate governance.
There are three main obligations — economic, political, and social responsibility. Thus, charities — like private companies — must comply with corporate governance in terms of professionalism, good management, performance and management evaluation, accountability and transparency in all activities.
Many developed countries such as the United Kingdom have begun to promote charities to relieve the government of some of its heavy financial obligations. Thus, the British government has sought to partner with charities to meet common economic and social goals in terms of unemployment, security, poverty, drugs, and other important issues.
British Prime Minister David Cameron’s speech, on July 19, 2010, two months after his election, was reflective of how fully he had embraced this approach pointing out the huge financial responsibility on the government, he feared that it was in danger of failing to fulfill its obligation to provide important social services.
He, therefore, called on British citizens to support charities and get involved in volunteer work to address these social obligations.
Prime Minister Cameron called his speech “Big Society and Volunteer Work,” which discussed issues such as unemployment, security, fighting poverty, social equality, and other economic and social issues.
He even stated that the role of the government should facilitate charity organizations and volunteer work and do everything possible to free them from bureaucracy and centralized decisions.
However, it is an uphill task and the struggle of charities to partner globally with governments is well documented.
One of the worst was after Sept. 11, 2001 when the US government adopted the Patriot Act.
The law was initially designed to fight terrorism and money laundering by imposing many financial restrictions on banking.
But it has taken the unpleasant form of “Know your Client” to list those suspected of financing terrorism (OFAC list).
Although some charities may not adhere to the goals of promoting political, social and economic benefits and may engage in wrongful activities, the vast majority of charitable organizations operate in good faith and within the law.
A few bad elements have sullied the reputation of many extremely worthwhile charities and created an environment of apprehension, suspicion, illegitimacy, causing a lack of public confidence.
Sometimes, it has gone so far as to allege treason and expose banking institutions and prominent individuals to lawsuits or for being on the OFAC list.
Some people working for international charities have been accused of aiding terrorist activities.
Sometimes, countries and dictators use what is called “government terrorism against the volunteers who work in charity organizations” as an excuse to isolate, intimidate, terrorize, frighten, and attack their opponents. Is it any wonder then that those who work for charitable organizations feel persecuted under terrorist laws like the Patriot Act? Unfortunately, the international media further contributes to this by confusing well-meaning individuals who then become reluctant to financially support dubious charities.
Another problem is the incidence of bad management and financial and administrative corruption in some charities. This has caused many to question the credibility of charitable work and its management.
The western media have exposed this corruption where leaders of certain charities siphon off 80 percent of the contributions received from donors when overheads should be more in the range of 12 percent of the gross income.
Favoritism and other aspects of administrative corruption lead to suspicion among potential contributors and volunteers, ensuing in a complete loss of faith in some charities.
To avoid this, charities must view their donors and volunteers as a company views its stockholders. Ethical codes, professionalism, and corporate governance should govern charitable activities.
Charitable work should fulfill its obligation within the framework of transparency, compliance with society, the economy, and government.
What’s more, charities should be able to work autonomously without direct governmental involvement.
The role of the government should be to simply support those persons who are involved in charitable work and defend them internationally.
The government should also develop the sector as a vital and international sector and as a partner in sustainable domestic development.
In some countries, charities have lobbying functions and considerable international influence, such as the Bill and Melinda Gates Foundation and the Clinton Global Initiative.
Charitable and volunteer work is particularly relevant to this part of the world as charity lies at the heart of Islam. As Muslims, we believe that charitable works are just like exchanging trade with Almighty Allah. The Holy Qur’an says, “Who is he that will lend to Allah a goodly loan so that He may multiply it to him many times? And it is Allah that decreases or increases (your provisions), and unto Him you shall return.” Al-Bakara: 245. The human soul is very precious, and the Qur’an states, “Who saves the life of one, it shall be as if he had saved the life of all mankind.” Therefore, we should encourage charitable work among our family and friends. This encompasses many activities, both big and small, including smiles, social services, caring for the elderly, the environment, animals and endowments for the sake of Allah. These activities must be an important part of our culture and included in the educational curriculums at all grade levels.
Further, it should be mandatory for our male and female students to complete a certain number of hours in community service in order to graduate from high school or university.
We can be proud that Saudi Arabia already spends 5 percent of its GDP on charitable works, higher than many developed countries like the US, which spend only 2 percent of its GDP on charitable activities.
We must build on this progress by encouraging complete transparency and greater accountability regarding the revenue received and spent by charities, removing bureaucracy, which governs the licensing of charitable activities, and providing legal protection for volunteers.
All charitable work should be governed by local corporate governance and within the framework of religious rulings with the additional onus of individual responsibility for developing, improving, and enhancing the work of charities.
— Sami Al-Nwaisir is a financial economics expert and chairman of Al-Sami Holding Group. Sami@alsamigroup.com