Markets: A Comprehensive Guide to Saudi Financial Markets

The terms "Markets" or "financial markets" in the Kingdom of Saudi Arabia primarily refer to the array of structures and platforms through which financial instruments such as stocks, sukuk, bonds, and index funds are traded under organized systems and regulations. The Saudi stock market (Tadawul) leads as the largest financial market in the Middle East and North Africa, operating alongside other markets like the sukuk and bond market and the Nomu Growth market dedicated to small and medium enterprises. All these markets are overseen by the Capital Market Authority (CMA), which focuses on investor protection, enhancing transparency and disclosure, and ensuring financial stability. The concept of "Markets" transcends mere trading platforms, encompassing the regulatory environment, technical infrastructure, legislation, and actors such as brokers, banks, and local and foreign investors.

The Saudi financial market consists of several main parts:
- Main Market: Includes major companies from various sectors, imposing strict listing standards in terms of capital and financial performance.
- Nomu Growth: An alternative platform for small and medium-sized enterprises and startups, with more flexible listing standards to support innovation and entrepreneurship.
- Sukuk and Bonds Market: Allows investors to trade government and corporate debt instruments, with a notable increase in issuance volume and trading values.
- Real Estate Investment Trusts (REITs) and Exchange-Traded Funds (ETFs): Enable portfolio diversification and facilitate access to multiple asset classes.
- Regulatory Bodies: Headed by the Capital Market Authority (CMA) and Tadawul Holding Company (which manages the platform and technical system).
All these components integrate to create an advanced financial market capable of accommodating the needs of local and international companies and investors, enhancing the Kingdom's attractiveness as a regional and global financial hub.

The Capital Market Authority (CMA) plays a pivotal role in regulating and managing local financial markets. The authority's tasks include establishing regulations and rules governing trading and listing, and monitoring compliance by companies, brokers, and investors. The CMA also oversees disclosure and transparency operations, implements governance reforms, and works to protect investor rights and mitigate risks. In recent years, the authority has launched numerous initiatives to enhance transparency, such as requiring companies to provide periodic disclosures, developing a complaints system, and facilitating foreign investors' access to the markets. The CMA keeps pace with global changes by updating its regulations to align with international classification standards (MSCI, FTSE), thereby enhancing the Saudi market's position on the global investment map.

Financial indicators are a key tool for measuring the performance of "Markets" in Saudi Arabia. The most prominent of these indicators include:
- TASI Index: The general index for all listed stocks.
- Sector Indices: Such as banking, energy, petrochemicals, insurance, and real estate indices.
- Nomu Market Indices: Measure the performance of small and medium enterprises.
- Sukuk and Bonds Indices: Show trends in the debt instruments market.
Indicators such as market capitalization, price-to-earnings (P/E) ratio, dividend yield, and liquidity ratio are also used to monitor market health. For example, the total market capitalization of listed companies reached trillions of riyals in 2024-2025, while the TASI index recorded significant jumps following economic recovery and regulatory reforms. Official trading reports provide daily and weekly updates for investors.

Reforms in the Saudi financial market are accelerating within the framework of Vision 2030, which aims to diversify the economy and reduce dependence on oil. These reforms have included updating regulations, expanding the investor base, developing digital infrastructure, and launching new markets such as the Nomu and Islamic sukuk markets. Recent notable developments include:
- Facilitating foreign investment and increasing the foreign ownership cap in certain sectors.
- Encouraging companies to pursue initial public offerings, especially in technology, healthcare, and food sectors.
- Enhancing transparency and disclosure through updated accounting standards and regulatory requirements.
- Launching specialized index funds and new real estate investment funds.
These steps enhance market flexibility and diversity, attracting local and international capital while supporting sustainable growth for the national economy.

Certain sectors hold particular importance in the Saudi "Markets" due to their high weights and influence on financial indicators. These sectors include:
- Banking and Financial Services: Representing about 30-35% of the index weight, with companies like Al Rajhi Bank and National Commercial Bank.
- Energy and Petrochemicals: Led by Saudi Aramco and SABIC, serving as a primary driver for the market due to their connection to oil prices and global demand.
- Insurance: An active and growing sector amid reforms and the expansion of health and mandatory insurance.
- Real Estate Sector: Includes real estate development companies and traded real estate funds.
- Retail Sector: Comprising major local brands and consumer market chains.
These sectors contribute to market stability, while innovative sectors such as technology, health, and education emerge as rising forces within Vision 2030.

The Saudi markets have witnessed increased activity in initial public offerings during 2024-2025, with many companies announcing their intention to list a portion of their shares on the main market or Nomu. Among these companies are "Intaj" (Agricultural and Industrial Investment) and SMC Hospitals Group, along with emerging technology and health companies. The IPO activity reflects companies' desire to raise capital for expansion and allows investors to benefit from growth opportunities. IPOs are subject to precise standards, including financial and regulatory disclosure, selection of investment banks, and provision of a comprehensive prospectus. These offerings indicate the market's vitality and its ability to finance new projects and stimulate trading.

With updated regulatory policies, foreign investment in Saudi markets has become easier, especially after allowing foreigners to own shares in real estate companies in Mecca and Medina and expanding the categories of eligible investors. The maximum foreign ownership in listed companies remains at 49%, with some exceptions. The market attracts international investors due to high liquidity, increasing transparency, and its connection to global indices like MSCI. Entering the market requires foreign investors to open a trading account with a licensed broker and complete identity verification procedures. This policy aims to attract new capital and increase market depth, supporting economic diversification projects.

Trading in the Saudi financial market is conducted electronically through approved platforms managed by Tadawul Holding Company. The procedures include:
- Opening a trading account with a licensed broker after providing the necessary official documents.
- Executing buy and sell orders during official market hours (10:00 AM to 3:00 PM).
- Settling transactions within two business days (T+2).
- Monitoring periodic disclosures of company results and distributions.
- Imposing simple commissions and regulatory fees on transactions.
These procedures ensure fairness and transparency in trading, allowing individual and institutional investors to participate effectively in the market according to established laws.

Saudi markets offer a variety of investment fund options, such as exchange-traded funds (ETFs) and traded real estate investment trusts (REITs). These instruments allow investors to diversify their portfolios without needing to purchase stocks or real estate directly. Index funds track the performance of a specific index, while real estate funds invest in income-generating real estate assets and distribute profits periodically. The growth of these funds contributes to increased market liquidity and facilitates access for individual and institutional investors, providing high transparency through periodic reports published on the Tadawul website.

Saudi markets are significantly affected by global oil prices, given the Kingdom's role as the largest crude oil exporter. Rising oil prices often positively reflect on the market due to increased government revenues and developmental spending, while declining prices may lead to reduced liquidity and investment. However, Vision 2030 aims to reduce this dependence by supporting other sectors. Additionally, macroeconomic factors such as monetary policy, interest rates, and geopolitical changes influence market performance and index volatility.

Saudi markets face various challenges, including:
- Fluctuations in oil prices and their impact on the macroeconomy and liquidity.
- Sudden legislative and regulatory changes.
- The degree of transparency of companies and financial disclosure.
- Regional geopolitical risks and their implications for investor confidence.
- Regional competition with other Gulf markets.
- Challenges in diversifying sectors and keeping pace with digital transformation.
Regulatory bodies strive to mitigate risks by updating regulations, enhancing governance, and developing new financial instruments, but it remains essential for investors to carefully assess risks and consult specialists before making any decisions.

The Saudi financial market provides a range of official sources for following news about "Markets" and their data:
- The official Tadawul website: Displays stock prices, announcements, financial statements, and market analyses.
- The Capital Market Authority: Issues regulations, administrative decisions, and news on regulatory disclosures.
- Financial news websites such as Argaam, Reuters, and Bloomberg.
- Listed companies' websites: Publish their quarterly results and governance reports.
- Electronic trading applications.
It is important to rely on official and trustworthy sources to avoid rumors and make decisions based on accurate and up-to-date information.

Saudi markets are the largest in terms of market capitalization and number of listed companies among Gulf countries, surpassing markets like Dubai Financial Market, Abu Dhabi, and Qatar. The Saudi market is characterized by its depth and high liquidity, with a diverse range of sectors including energy, banking, industry, real estate, and technology. As regulations evolve, Gulf markets are gradually integrating, exchanging experiences and standardizing some criteria to attract regional and global capital. Competition remains, especially in the financial services and IPO sectors, as each market seeks to showcase its relative advantages and regulatory facilitation.