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Experts call for action amid Saudi mutual fund crash
The recent Saudi stock market crash amid the global financial crisis has had a heavy impact on the local mutual fund market, wiping off at least three billion riyals in a single week.
- By Mariam Al Hakeem, Correspondent
- Published: 23:32 October 15, 2008
Riyadh: The recent Saudi stock market crash amid the global financial crisis has had a heavy impact on the local mutual fund market, wiping off at least three billion riyals in a single week.
The assets of Saudi mutual funds plummeted to 22.5 billion riyals against 25.5 billion riyals on October 4, 2008, a decrease of 13.3 per cent.
Taking into account the situation, Saudi analysts urged the financial services funds to pump more money to ensure liquidity in the mutual fund market.
Mutual fund managers keep reserve money to tackle urgent situations. This money could be pumped into the local market to ward off the current crisis, they said.
Prominent Saudi financial analyst Abdul Lathief Al Otaibi said such timely intervention by mutual fund authorities would contribute substantially to safeguarding the market from the impact of the global financial crisis and help it to return to normality.
"This will also reassure the market and regain the confidence of investors in the growing mutual fund market in the Kingdom," he said while hoping that the mutual funds have the potential to yield good results in the near future.
Meanwhile, Islamic mutual funds have also been affected by the current crisis. The funds posted a loss of 1.2 billion riyals (7.9 per cent) in assets, falling to 14 billion riyals from 15.2 billion riyals last week.
The losses of traditional mutual funds were much higher, amounting to 1.8 billion riyals. The volume of funds saw a huge loss of 24.7 per cent, falling to 7.3 billion riyals from 9.1 billion riyals since last week.
Speaking to Gulf News, several economic experts urged the Saudi financial and banking authorities to show more transparency.
Dr Ihsan Bu Hulaiqa, a noted Saudi economist, urged the Saudi Capital Market Authority to follow the example of other capital markets in making close assessments of the magnitude of the current crisis and step up efforts to restore confidence of investors so that the market could recover within a short span of time.
Meanwhile, Naif Al Shamri, a Saudi economic researcher, believes that pronouncements being made by the officials every now and then would not suffice in restoring confidence
"Instead of this, they should come out with concrete statements, supported by substantial evidence and figures of the real situation of the market, and spell out the measures going to be taken to achieve its recovery," he said.
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