Tadawul Rallies as Capital Eats Parks and Cable

Saudi Arabia's Tadawul All Share Index climbed 140.27 points, or 1.38 percent, on Wednesday to close at 10,308.37, its third straight session of gains. Trading volume hit 270.1 million shares, worth roughly SR4.78 billion ($1.27 billion) across 458,073 transactions. Of the listed companies, 210 advanced and 52 declined.

That's the headline number. Here's what sat underneath it.

The Park and the Landlord

Makkah Construction and Development Co. announced it had signed a 25-year land lease with Al-Balad Al-Ameen for Development and Urban Regeneration to invest in and develop Al-Misfalah Park in Makkah. The site spans about 109,000 sq. meters. The plan, in the company's words, is to transform the existing park into an integrated destination combining green spaces with commercial and recreational activities.

Read that again. A park, a piece of open ground in a city, becomes a rent-bearing asset. The annual rental value is approximately SR25.8 million, excluding value-added tax, with a 10 percent increase every five contractual years. The lease carries a 30-month grace period spread over the first five years, and the 25-year clock starts only once the site is handed over. The company, whose share price rose 3.13 percent to SR66, said the project is expected to generate recurring rental income once development work is done and operations begin.

Nobody in the filing says what happens to the people who currently use the park. The filing wasn't written for them. It was written for shareholders.

Capital Calls and Loss Ledgers

Saudi Cable Co. told the bourse that the Capital Market Authority approved its application to raise capital by SR400 million through a rights issue. The approval, announced Nov. 10, still needs the company's extraordinary general assembly to sign off. The stock gained 9.32 percent to close at SR179.50.

Saudi Fisheries Co. told a different story. Its accumulated losses reached SR24.8 million, or 37.03 percent of its SR66.99 million capital. The company blamed the suspension of commercial operations during restructuring, zero revenue despite continuing general and administrative expenses, losses from discontinued operations, and impairment losses on non-financial assets. Its fixes: sell a 51 percent stake in Al-Haridha National Aquaculture Co. to Sarah National Trading Co., sell its headquarters land and building in Riyadh's Al-Malaz district, and keep rationalizing operating expenses. A proposed capital increase failed to win the required majority at an extraordinary general assembly on Sept. 27. The share price still climbed 8.18 percent to SR61.50.

A firm with no revenue, selling its own headquarters, gets rewarded by the tape. Shareholders vote on its future; the workers behind the discontinued operations don't appear in the filing at all.

Contracts From Above

Al-Ashghal Al-Moysra Co. was awarded a SR15.47 million contract by the Saudi Authority for Industrial Cities and Technology Zones, covering operation and maintenance of buildings and urban assets in the first cluster of the authority's western sector. The project was awarded Nov. 10, with signing scheduled for Dec. 1. Shares rose 2.04 percent to SR17.

Meanwhile First Avenue for Real Estate Development Co. announced its board approved moving from the Nomu Parallel Market to the Main Market, pending Saudi Exchange approval. Its shares edged up 0.56 percent to SR1.81.

The day's biggest movers: Raoom Trading Co. and Knowledge Economic City each rose 9.95 percent, closing at SR80.70 and SR20.99. Nofoth Food Products Co. gained 9.38 percent to SR6.65. On the losing side, Advanced Building Industries Co. fell 6.48 percent to SR24.09, Anaam International Holding Group dropped 4.65 percent to SR11.90, and Development Works Food Co. shed 4.60 percent to SR69.50. The Nomu parallel market added 94.98 points, or 0.43 percent, to 21,948.57. The MSCI Tadawul 30 Index gained 18.45 points, or 1.34 percent, to 1,397.82.

Every one of these announcements flows through an authority, a regulator, a board, or an assembly. Land gets leased, capital gets approved, contracts get awarded, and the number goes up. The people who live next to the parks and work inside the failing firms appear in none of it.