Stocks in the Saudi Financial Market: A Comprehensive Guide

Stocks are units representing ownership in the capital of a joint-stock company. When an individual or entity owns a share in a company listed on the Saudi Financial Market, it means they own a part of the company's assets and rights. Owning stocks allows investors to participate in the company's economic growth through dividends or increases in the market value of the stock. In Saudi Arabia, stocks play a pivotal role in financing companies, helping them raise the capital needed for expansion, and providing investors with a channel to invest in various economic sectors, from energy and banking to services and industry. The stock market also contributes to enhancing transparency and governance, as listed companies are subject to strict disclosure requirements that ensure the protection of shareholder rights. This has led to increased confidence among local and foreign investors in the Saudi market, especially after the listing of major companies like Saudi Aramco, which has strengthened the market's position as a primary platform for attracting investments and achieving the Kingdom's Vision 2030 in diversifying the national economy.

Stocks in the Saudi market vary into several main types, the most prominent being ordinary stocks and preferred stocks. Ordinary stocks grant their holders voting rights in general assembly meetings and the right to receive dividends if declared by the company. Preferred stocks, on the other hand, give their holders priority in receiving dividends or a share of assets upon liquidation, but they often do not grant voting rights. In the Saudi market, the vast majority of traded stocks are ordinary stocks, while preferred stocks remain less common and are issued by some companies under special circumstances. Additionally, there are freely traded stocks (Free Float), which are available for public trading in the market, and stocks owned by founders or strategic entities that are not traded regularly. Each type of these stocks has different characteristics and rights, and investors must understand these differences to determine what aligns with their investment goals and acceptable risk levels. It is worth noting that the Capital Market Authority requires full disclosure of the different types of stocks issued by each listed company.

The Saudi stock market is regulated by the Capital Market Authority (CMA) and the Saudi Exchange (Tadawul). The CMA is responsible for setting the regulations and rules governing listing, trading, and disclosure processes, ensuring the protection of investors' rights and market transparency. The Saudi Exchange manages the technical infrastructure of the market and executes daily trading operations, providing real-time data on stock prices and trading volumes. The market consists of several main sectors, including energy, banking, petrochemicals, telecommunications, industry, and services. The market operates entirely electronically, allowing investors to place buy and sell orders through trading platforms approved by financial brokerage firms. Trading hours in the Saudi market are typically from 10:00 AM to 3:00 PM local time. The market also offers various investment products, from individual stocks to exchange-traded funds (ETFs) and sector indices, providing investors with ample opportunities to diversify their financial portfolios.

Buying and selling stocks in the Saudi Financial Market is done through brokerage firms licensed by the Capital Market Authority. An investor begins by opening an investment account with one of these firms, which can often be done electronically through the company's platform or by visiting one of its branches. After completing the account opening procedures and providing the required documents (such as a national ID or residency for foreigners), the investor funds their investment portfolio with the amounts they wish to invest. They can then enter buy orders through the electronic trading platform, specifying the stock symbol, the desired quantity, and the order type (limit order or market order). If the order matches corresponding sell orders, the transaction is executed, and the stocks are added to the buyer's investment portfolio. The investor can sell in the same way, specifying the stocks they wish to sell and the desired price. Cash settlement and stock delivery typically occur within two business days (T+2). Modern trading platforms allow for real-time price tracking, access to financial statements, and execution of instant orders, making it easier for investors to manage their portfolios effectively.

The general index of the Saudi market (Tadawul All Share Index – TASI) is the main measure of the performance of Saudi stocks as a whole. The index is calculated based on the market capitalization of the freely traded stocks of all listed companies, reflecting the average market performance. An increase in the index indicates an improvement in the prices of most stocks, while a decrease reflects a market decline. During 2024, the index achieved a moderate increase of approximately 8%, supported by a recovery in oil prices and increased investment liquidity. The index is particularly affected by the performance of major companies such as Saudi Aramco and major banks, as these companies represent a significant portion of the total market capitalization. Investors can track the index in real-time through the Saudi Exchange website and financial news platforms, and they can also track specific sector indices (such as the energy or banking sector) for a more accurate picture of the performance of different sectors. The general index is also used as a benchmark to compare the performance of investment portfolios and funds with the overall market performance.

The Saudi financial market witnessed relatively positive performance in 2024 and 2025, supported by improved oil prices and increased local and global liquidity. The general index (TASI) reached levels approaching 12,000 points by the end of 2024, compared to around 11,000 points at the beginning of the year. The average daily liquidity exceeded 30 billion riyals, while the total market capitalization of listed companies reached approximately 10 trillion riyals. The energy sector, led by Saudi Aramco, topped the sectors in terms of performance and market capitalization, followed by the banking and petrochemical sectors. Some other sectors, such as telecommunications and industrial investment, also performed well due to regional expansions and digital transformation. In contrast, some service and construction sectors faced financial pressures and fluctuations in local demand. The number of listed companies rose to about 200, with new listings particularly in the energy and services sectors, and the percentage of foreign ownership in the market increased to over 10% by the end of 2024. This performance reflects the recovery of the Saudi economy and its alignment with global transformations and the success of Vision 2030 initiatives.

Saudi Aramco is the largest listed company in the Saudi Financial Market and one of the largest companies globally by market capitalization. The price of Aramco's stock in early 2025 was around 36 riyals, with a market value between 7.5 and 8 trillion riyals. The company recorded a net profit of approximately 398 billion riyals for 2024, with a price-to-earnings (P/E) ratio of about 19-20 times, and an annual dividend yield ranging between 5-6%. Despite a decline in net income in 2024 compared to the previous year due to falling oil prices, the company managed to maintain strong dividends and high operational liquidity. Aramco represents a key pillar of the market, as its stock movements directly affect the general index and the energy sector. In addition to its oil and gas operations, the company is moving towards investing in renewable energy and technology, such as its partnership with the Public Investment Fund in the field of artificial intelligence. These transformations reflect Aramco's strategies in facing global changes and diversifying future revenue sources.

Valuations of Saudi stocks rely on several key financial indicators, the most prominent of which are the price-to-earnings (P/E) ratio, dividend yield, revenue and profit growth, and operational liquidity. The P/E ratio is used to measure how high or low the stock price is compared to the company's earnings, where a high value indicates expectations of future growth or an inflated valuation. Dividend yield reflects the ratio of distributed profits to the stock price and is of interest to investors seeking fixed income. Revenue and profit growth is an indicator of the company's ability to expand and achieve sustainable profits. Operational liquidity and free cash flow provide insight into the company's ability to finance its operations and distribute dividends without resorting to borrowing. In the Saudi market, major companies such as Aramco, SABIC, Al Rajhi, and STC are among the companies that achieve strong financial indicators, making them a focal point for local and international investors. It is important for investors to analyze these indicators periodically and compare them with companies in the same sector to obtain an accurate picture of the company's financial situation.

The Saudi stock market is divided into several main sectors, each with its characteristics, challenges, and investment opportunities. The energy sector, led by Aramco, represents the largest share of market capitalization and significantly contributes to GDP. The banking and finance sector includes major banks such as Al Rajhi and National Commercial Bank, characterized by high liquidity and regular dividends. The petrochemical sector includes companies like SABIC, and its performance depends on oil prices and global demand for chemical products. The telecommunications sector includes leading companies like STC, benefiting from digital transformation and increased demand for internet services. There are also sectors such as industry, services, insurance, and real estate, each with its own dynamics. The diversification of sectors in the Saudi market provides investors with ample opportunities to achieve a balance between growth and income while distributing risks, with the necessity of studying each sector individually and understanding the influencing factors such as global prices, local regulations, and economic trends.

The Saudi financial market has witnessed a notable development in the participation of foreign investors, especially after the regulatory facilitations introduced by the Capital Market Authority in recent years. The percentage of foreign ownership rose to over 10% by the end of 2024, and new financial instruments such as Certificates of Deposit Receipts (CDRs) were introduced to facilitate the entry of global investors. Foreign participation enhances liquidity and contributes to increasing market efficiency and improving governance and disclosure standards. Foreign investments are often concentrated in leading stocks with high liquidity and strong financial indicators, such as Aramco, SABIC, and major banks. This participation has also prompted companies to commit to best global practices in disclosure and transparency. With the continuation of economic reforms and the expansion of available financial products, the role of foreign investors is expected to continue growing, enhancing the integration of the Saudi market with global markets and increasing its attractiveness for long-term investment.

Investing in Saudi stocks, like other financial markets, involves several risks that must be considered. The most prominent of these risks are price fluctuations resulting from economic or political changes, as stock prices can be significantly affected by local or global news such as oil price movements or changes in monetary policies. There are also liquidity risks, especially in low-trading stocks, which may make it difficult for investors to sell quickly or at a suitable price. Other risks include sector-specific risks, where a particular sector may face crises affecting its performance regardless of the overall market situation. Regulatory and legislative risks should also be noted, as sudden changes in regulations or taxes may affect companies' profitability. Finally, there are risks associated with poor management or lack of transparency in some companies. It is important for investors to diversify their portfolios and follow news and official reports to mitigate these risks.

Stock analysis in the Saudi market relies on two main approaches: fundamental analysis and technical analysis. Fundamental analysis focuses on studying the company's financial statements, such as revenues, profits, cash flows, and debt ratios, in addition to evaluating indicators such as the P/E ratio and dividend yield. It also considers economic and sectoral factors that may affect the company's performance. On the other hand, technical analysis relies on studying stock price movements, trading volumes, and chart patterns to predict short-term market trends. Investors use fundamental analysis to make long-term investment decisions, while traders prefer technical analysis to achieve quick profits from price fluctuations. In practice, many investors combine both approaches to achieve a comprehensive evaluation of stocks before making a buy or sell decision.

Local and global economic factors play a pivotal role in determining the trends of the Saudi stock market. Oil prices are at the forefront of these factors, as their rise supports the profits of companies operating in the energy sector and enhances government revenues, positively reflecting on the market as a whole. Conversely, falling oil prices may lead to a decline in the profits of oil and petrochemical companies and negatively affect the general index. Additionally, interest rates and the monetary policies of central banks affect the cost of financing for companies and the demand for stocks. Global economic conditions, such as growth or recession in major economies, also affect the demand for Saudi exports and capital flows. Therefore, it is essential to monitor these factors and understand their impact on different sectors when evaluating investment opportunities in Saudi stocks.

Obtaining accurate and reliable information is essential for making informed investment decisions in the Saudi stock market. Among the prominent official sources is the Saudi Exchange website, which provides real-time data on stock prices, indices, and company news. The Capital Market Authority (CMA) website is also an important reference for official announcements and regulations. Other specialized sources include Argaam, which offers analyses and disclosures of companies, in addition to local economic media such as Al Arabiya Financial and Al-Middle East Economic. Many investment banks and financial research firms also issue periodic reports on the market and listed companies. It is always advisable to verify the accuracy of news through official sources and not rely on rumors or unverified information circulating on social media.

The Saudi financial market has witnessed a series of legislative and regulatory developments in recent years aimed at enhancing market efficiency and attracting local and foreign investments. Among the most notable developments are the facilitation of procedures for opening investment accounts, allowing foreigners to own larger percentages of stocks, and launching new financial products such as exchange-traded funds (ETFs) and sector indices. The Capital Market Authority has also focused on enhancing transparency and disclosure by requiring listed companies to provide quarterly financial reports and periodic reviews of governance levels. International Depository Receipts (CDRs) have also been introduced, and dual listing processes for some companies have been facilitated. These developments have contributed to increasing liquidity and the number of individual and institutional investors, positively reflecting on market performance and attractiveness. These reforms are expected to continue alongside the implementation of Vision 2030 initiatives to develop the financial sector and enhance the Kingdom's position as a regional financial hub.