gilder louisville: Saudi stock market regulator caps first-day price volatility

DUBAI, May 12 (Reuters) - The Saudi Capital Market Authority

(CMA) announced on Sunday that stocks on the kingdom's bourse

would be limited to price swings of 10 percent on their first

day of trade.

Saudi Arabia, home to the Gulf Arab region's largest stock

exchange, has been slowly amending its regulatory framework to

bring it closer to international standards; market participants

hope this will allow the bourse to open to direct investment by

foreigners, a step which authorities are considering.

Mohammed bin Abdulmalik Al al-Sheikh, head of the CMA, said

last week that the regulator was trying to limit "high levels of

speculation" in the stock market.

Until now, firms debuting on the Tadawul had unrestricted

price movement on their first day of trading, meaning shares

often soared before falling back later.

When National Medical Care Co listed on March 13,

it traded up intra-day to a high of 200 riyals ($53.33) from its

initial public offer price of 27 riyals, before ending its first

day at 122 riyals. By March 31, the share slid to 72 riyals.

The new limit on first-day price moves is "part of the CMA's

regulatory responsibility to regulate and develop the capital

market and protect citizens and investors", the CMA said.

Saudi Arabia has used IPOs to distribute stakes in

government companies at vastly deflated prices - often 10 riyals

a share - as part of efforts to share the country's oil wealth

with ordinary citizens.

($1 = 3.7502 Saudi riyals)

(Reporting by David French; Editing by Andrew Torchia)

gilder louisville