Saudi Arabia's King Abdullah said the wealthy Gulf Arab kingdom plans a risk-free fund for ordinary Saudis to trade on the bourse after a recent crash impoverished hundreds of thousands of citizens.
The fund, the latest bid by the state to buoy the politically sensitive market, will allow nationals to invest up to 500,000 riyals ($133,300) over two years, with the state shouldering any losses. The fund is aimed at individual investors, estimated to number at more than 3 million.
"Those who wish to invest more than 500,000 (riyals) will not be allowed," state media quoted King Abdullah as saying late on Monday. "The fund will be for people with limited income, employees and others ... this group matters most to me. Businessmen or the so-called big fish can win or lose as they please," he added.
The bourse, the Arab world's largest, has lost more than half of its value in over two months. The fall has put pressure on the state to redress losses, since ordinary Saudis regard the bourse as a way of sharing in the kingdom's vast oil wealth.
King Abdullah said small investors would "be able to buy and sell for two years, if they win then it's their luck with God's will and if they lose then their capital is preserved with us". The king did not say when the fund will be established but said: "There is no doubt that I am determined to do this".
The majority of small investors lack basic market knowledge and authorities have blamed wealthy, sophisticated speculators for manipulating trade.
Many Saudis welcomed the move, but some were still bitter.
"It's a nice but an emotional reaction I have. I could subscribe to this fund, but frankly I am looking at more interesting options, like property," Abdul-Rahman al-Moshigah said.
"I have lost 75 percent of my capital, and there are a lot of people who lost a lot of money. Now how can they sack the CMA chief without explanations and no trial."
Analyst Dawoud al-Shiryan told Reuters the fund fitted in with the king's policy of raising living standards. "Poverty and unemployment affect terrorism and instability and the king knows the result of this decision, which has an important political significance," he said.
The kingdom has been battling al Qaeda militants for three years. It has largely crushed the insurgency through a military campaign and by appealing to ordinary Saudis for support. "King Abdullah wanted to revive the economy through several decisions but the bourse acted in the opposite direction and he's trying to fix the mistakes that are behind this," he added.
Comments
Comments are closed.