A number of companies listed on the main stock market (TASI) and the parallel stock market (Nomu) announced their desire to split the nominal value of their shares, breaking the rule that the nominal value of listed companies is 10 riyals. This step by the companies comes at a time when Aramco is trading without a nominal value, while Americana is trading with a nominal value of only 0.07 riyals.
The Saudi stock market analyst, Anas Al-Rajhi, confirmed that the splitting of the nominal value of the share is likely to reflect the flow of liquidity on the company’s shares. Its value is 100 or 10 riyals, so it allows small wallets to buy, in addition to some believing that the stock has become cheap.
He stressed that the financial indicators of the company always matter, and as for the stock split, there is no change in the company's index when (share split).
He added that the exaggeration in the belief of some that stock splitting will greatly increase liquidity is not necessarily correct, especially when traders get used to the price, especially since the number of shares will multiply 10 times when the nominal value of the share is reduced from 10 riyals to one riyal.
He noted that stock splitting is very dangerous for those who trade randomly, as it may give the impression that the stock has become cheap, stressing the necessity of evaluating the stock fairly.
The second reduction
In 2006, after the collapse of shares in February, the Saudi Capital Market Authority announced that it had decided, in agreement with the Ministry of Commerce and Industry – at that time – to offer an agreement to reduce the nominal value of the share, allowing the shares to be split for the listed companies, and the nominal value of the companies – at that time – was about 50 riyals, while what was done Agree to reduce it to 10 riyals.
Retail into riyals or 50 halalas
Some companies announced their desire to split the nominal value of their shares from 10 riyals to one riyal only, which is reflected in the decrease in the share value to 10% of the current price, with an increase in the number of their shares by an additional 9 times. The most prominent of these companies that announced their intention and desire to split their shares to become Its nominal value is one riyal; “Jarir”, “Burgerizer”, “Tadweer”, while “Al Kathiri” company announced its intention to split the nominal value of the share to 0.5 riyals, by decreasing the value of the share to 5% of its current value, with an increase in the number of shares by 19 times.
Abdul Rahman Al-Misbahi (Jeddah) @ sobhe90
