Posted: February 2nd, 2015

What is the name of each stock exchange market in the GCC and how many markets are there?

Paper, Order, or Assignment Requirements

 
Aims and Scope:
In this assignment, you are required to read the journal article attached in the assignment
folder. The article is written by Dr. Ahmed and it is currently under review by the Multinational
Financial Management Journal (B ranked journal). The article is entitled “IPOs underpricing and
long-run performance: Evidence from the six countries of the Gulf Cooperation Council”. It is an
article investigates the IPOs that occurred in the GCC region between 2003 and 2010.
The assignment is designed to provide students with the opportunity to practice the
academic research style. Upon completion of this assignment, students should know how to read
an academic journal article and extract the relevant information they need. Also, it is a good
preparation for students to gain more information about the GCC region and its capital markets
and IPOs.
General requirements:
This assignment is a group assignment of two students maximum. Please submit your
assignment in both a hard copy and a soft copy via email no late than (Week 14) Thursday, the
18th of December 2014. Demonstrate all your calculations. You need to do your calculations for
each country based on the country’s domestic currency. After that, you need to standardize your
answers by the equivalent $USD for the group of your chosen IPOs.
· The assignment should be conducted individually or by a group of two students
maximum.
· No two groups are to analyze the same six IPOs.
· Include all references used in your report.
· Late submission will have 20% of the mark deducted per day.
· Copying from the Internet or any other source without referencing is considered as a
cheating case and the student will be penalized according to Al Faisal University policy.3
Introduction to assignment:
Initial public offerings (IPOs) can be defined as the first sale of a company’s stocks to the
public. It is a transition for the company from being a privately owned enterprise to become a
publicly owned one.
In recent years, the GCC region has experienced a rapid increase in the number of
companies conducting IPOs and joining the stock market. The number of IPOs for instance in
Saudi Arabia alone has exceeded the number of originally listed companies in 2003. In this
assignment you are required to do some research and analysis for six IPOs of your choice from the
GCC region.
Tasks required:
Task 1.
GCC Markets (3 Marks)
Q1. What is the name of each stock exchange market in the GCC and how many markets are there?
Q2. How many industries are there in each GCC’s country? State these sectors.
Q3. How many companies are listed in each of the GCC countries?
Task 2.
IPOs in the GCC (5 Marks)
Pick six IPOs from the GCC countries, one from each country and do the following:
Q4. For each IPO, state when it went public and became listed in the stock market? 4
Q5. How much capital each IPO has raised in the offering? What was the offering price? How
many shares were offered? State the equivalent $USD amount.
Q6. What does oversubscription mean? How much each of these IPOs were oversubscribed by?
How many subscribers participated in the offering?
Q7. Allocation means the number of shares that each subscriber receives, how much shares the
subscribers have received in each of your IPOs?
Q8. What does “the hot issue market” mean? When did this happen in the GCC region? When was
the peak of IPOs exactly? and how many IPOs occurred that year?
Task3.
Underpricing of IPOs (9 Marks)
Underpricing is defined in the IPO literature as the first trading day return “the difference
between the IPO offering price and the IPO closing price in the listing day. Based on this:
Q9. Find the underpricing (the raw return) for each IPO?
Q10. Find the adjusted underpricing for each IPO? Adjust your answer with the general market
index (example: adjust the Saudi IPO underpricing with TASI and the Emirati IPO with Emirates
market and so on).
Q11. Find the average raw and adjusted underpricing for the six IPOs (the group)? Find the median
underpricing for the six IPOs?5
Q12. What was the maximum underpricing among the six IPOs?
Q13. What was the minimum underpricing among the six IPOs?
Q14. What was the opening price for your IPOs in the listing day, what was the high in the listing
day? What was the low in the listing day? Compare these various quotations.
Q15. What is the volume for each IPO in the listing day and what does it represent? Compare the
volume of the IPO in the listing day with the volume of the same IPO after one month.
Q16. In IPO literature, what does money being left on the table mean? And how much capital each
of your IPOs has left on the table?
Q17. Suppose, you bought the IPO in the listing day at the closing price and you hold it for one
month, what would be your return? What is the return if you hold it for three months, six months
and for one year?
“Note: A month is defined as 21 consecutive business days”.
Task4.
Corporate Governance: (3 Marks)
Q18. For your chosen IPOs, show the organization structure. Who are the board of directors? Who
is the chairman of the board? Who is the CEO?
Q19. How many shares are outstanding for each IPO and how many are not?
Q20. Is there any institutional investors in your IPOs? If yes, who are they? How much they own
of the company?