With the emergence of mortgage law, a big improvement in the sukuk market can be expected because banks and deposits cannot finance the mortgage market, says Hani O. Baothman, managing director and CEO of Sidra Capital.
“There has to be a sukuk market. I have never seen a mortgage market in the world that doesn’t operate with secondary bonds or sukuk market,” Baothman told Arab News in an interview.
He said the IPO market is also not doing well in Saudi Arabia and elsewhere in the region.
In fact, the IPO market in Saudi Arabia should have been more active.
“In my opinion the main problem with the IPO market arises from an emotional business press,” said Baothman.
“The reason is that recently the market saw the listing of a lot of family businesses,” he added.
“For some reason or the other, I don’t know why the Saudi press entertains writers who would like to please readers by attacking CMA on the valuation mechanism. They keep on reverting to completely unscientific and non-business reasons,” he said.
“Unfortunately this has a very bad impact on our economy because our economy is almost 90 percent family-owned. If we start this culture of attacking family businesses and accusing them of stealing investors’ money, we will have a very bad impact on the IPO market in the future,” Baothman said.
Referring to the rising trend of gold and silver prices, he said the huge amount of gold being bought has no industrial use. It is just an asset that people hold on to as an insurance against future currency collapses.
“Many central banks have been disposing of gold,” he added.