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    Parallel Stock Exchange for Sustainable Market Growth

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    Parallel Stock Exchange for Sustainable Market Growth

    Uploaded by

    kaylakshmi8314
    1 views20 pages

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    Download as pptx, pdf, or txt
    1 views20 pages

    Parallel Stock Exchange for Sustainable Market Growth

    Uploaded by

    kaylakshmi8314

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 20

    Parallel stock

    exchange for
    sustainable market
    growth
    Prof. Lakshmi Kalyanaraman
    SMEs
    • Small and Medium Enterprises (SMEs) are at the gross root of
    sustainable development of any successful economy.

    • Critical for job creation, innovation and inclusive economic growth

    • Significant contribution to GDP


    Recommendations for financial and
    sustainability
    • RBI committee on MSME lists

    • Infrastructure development

    • Capacity building

    • Technological upgradation

    • Improving forward and backward linkages


    Challenges
    • Risk averse and lack motivation to innovate

    • Lack of access to credit flow


    Debt market
    • ???
    Equity market
    • Lemons problem
    Parallel market for SMEs
    • Customized listing and regulatory requirements

    • As of 2017, 33 SME markets across 29 WFE (World Federation of


    Exchanges) member exchanges were operating with a total of 6807
    listed companies with a total market capitalization of over USD 1.3
    trillion.
    TADAWUL – Main market
    # firms listed
    250
    231
    223
    210
    199 203
    200 190
    179

    150

    100

    50

    0
    2016 2017 2018 2019 2020 2021 2022 2023 2024
    Nomu
    • Nomu, the parallel market was launched on the 26th February 2017

    • Stated objectives

    • Additional source of funding for issuers to access capital

    • Increased diversification and deepening of the Saudi capital market


    Nomu – contd.
    • Operational since 26th February 2017

    • After two years of listing on Nomu, companies can transit to the main
    market after complying with the process required by CMA.

    • More relaxed in terms of minimum Marketcap, number of public


    shareholders and continuous obligations
    Nomu – contd.
    • Qualified investors
    Nomu performance

    Source: Argaam
    IPOs
    Year # IPOs # shares (Mn.) IPO proceeds
    (SAR. Mn.)
    2017 9 20.48 752.25
    2018 1 1.20 32.40
    2019
    2020 1 1.25 30.00
    2021 6 8.59 1,940.97
    2022 17 21.25 1,257.72
    2023 7 25.26 1,094.36
    Nomu – contd.
    • 2019 – Direct listing without IPO to boost liquidity and increased
    number of listed firms
    Direct listings
    Year # listings
    2020 1
    2021 8
    2022 13
    2023 8
    Source: Argaam
    Nomu – contd.
    • 2021 Foreign investors are directly allowed in Nomu market
    Foreign investment
    foreign investment SAR Mn.
    600
    563.99

    500

    440.47

    400

    300

    200

    103.45
    100

    0
    2021 2022 2023
    Market ownership by investor
    category (% of the market)
    Year Institutional shareholding Non-institutional shareholding
    2017 11.17 88.83
    2018 8.28 91.72
    2019 3.56 96.44
    2020 32.39 67.61
    2021 24.66 75.34
    2022 30.18 69.82
    2023 48.03 51.97
    Performance of firms post-migration

    Source: Argaam

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