Saudi Market Index: Comprehensive Overview of Its Components and Performance

The Saudi market index, or the Tadawul All Share Index (TASI), is the primary measure of the performance of the Saudi stock market. The index includes all ordinary shares listed in the main market of Tadawul. The index is based on a weighted market capitalization calculation, meaning that companies with larger market capitalizations have a stronger influence on the movement of the index. TASI was created to be an accurate reflection of the health of the national economy, as it includes the largest influential sectors such as banks, petrochemicals, energy, telecommunications, and services. The index is updated in real-time during trading sessions and is automatically adjusted for any capital events (such as stock splits or capital increases). The index's base was set at a reference point (1,000 points) and is used to compare performance over time.

The TASI index relies on the principle of weighted market capitalization. This means that the weight of each company in the index corresponds to the total value of its traded shares. A company's weight is calculated as follows: the stock price multiplied by the number of outstanding shares available for trading. The market capitalizations of all listed companies are summed, and the result is divided by the index's base value. Weights are adjusted periodically to reflect changes in capital, new listings, or any mergers or acquisitions. The TASI does not directly account for the effect of cash dividends but is based on stock prices. This method provides an accurate picture of changes in the overall Saudi market value.

The Saudi market index in its current form was established in 2007, although previous less comprehensive indices existed. Since its launch, the index has undergone many phases and modifications aimed at increasing transparency and accurately representing the market. The index was expanded to include all companies listed in the main market, excluding suspended companies or those transferred to the parallel market (Nomu). Over the past two decades, the index has kept pace with the listing of giant companies such as Saudi Aramco, and the investor base has expanded with the gradual opening to foreign investment. The index has also experienced notable fluctuations linked to local and global factors, such as changes in oil prices, financial crises, and shifts in Saudi economic policy.

The Saudi market index ended 2024 at a level of approximately 11,252.66 points, up about 6% from the end of 2023. At the beginning of 2025, the index continued its positive trajectory, reaching around 11,300 points in January, and touching the 11,500-point mark multiple times in the first half of the year. The average daily trading volume in the first quarter of 2025 was approximately 3.5 billion riyals. This performance was supported by improved profits from major companies, relative stability in oil prices, and high liquidity in the market. The annual change rate ranged between 5% and 10% depending on the period and comparisons, with the reminder that historical performance is not indicative of future results.

TASI is characterized by its sectoral diversity, but it remains centered on specific sectors. The financial and banking sector (banks and insurance companies) accounts for about 25-28% of the index's weight, followed by the petrochemicals and energy sector at approximately 20%, then the telecommunications and technology sector, and the industrial and consumer services sectors. In recent years, banks and energy companies (especially Aramco and SABIC) have led the index's performance, while other sectors such as telecommunications have shown significant growth with the expansion of fifth-generation technologies and increased demand for digital services. The performance of these heavyweight sectors directly reflects on the index's daily and weekly movements.

The Saudi market index is closely linked to the macroeconomic environment of the Kingdom, especially with the dominance of sectors related to oil and finance. Rising oil prices often support the index's performance by boosting the profits of major companies and increasing government spending. The monetary policies of the Saudi central bank, the state budget, and global economic news (such as U.S. interest rate decisions) also affect investor sentiment and liquidity movement. Despite efforts to diversify the economy under Vision 2030, the index remains sensitive to changes in energy markets and global financial markets.

The year 2024 and beyond witnessed several developments impacting the index, including raising the ownership limit for qualified foreign investors in certain stocks to 49%, listing new companies in the market such as Computer and Information and Sphinx Consulting, along with massive expansion projects announced by Aramco. The Capital Market Authority continued its efforts in governance and raising transparency and disclosure standards. On the other hand, digital transformations in trading platforms enhanced investors' access to real-time information and data about the index and the companies listed in it.

The average daily trading volume during 2024-2025 was around 3 to 4 billion riyals, reflecting strong liquidity in the main market. The total market capitalization of companies listed in the index exceeded 7.5 trillion riyals by the end of 2024, and approached 8 trillion riyals in mid-2025. This growth is primarily driven by rising stock prices of major companies and new listings. Banks and energy giants remain the focal point of liquidity and weight concentration, making the index sensitive to their movements.

Among the prominent financial performance indicators for the Saudi market index during 2024-2025: the index level (closing point) ranged around 11,300 to 11,500 points, and the annual change rate reached 5-10% depending on the period. The market capitalization of the index was approximately 8 trillion riyals. Regarding the price-to-earnings ratio (P/E), it stabilized within the range of 18-22, while the average yield from cash distributions for major companies ranged between 2.5% and 4% annually. The revenue growth rate varied by sector, with banks and energy recording the highest growth rates in profits and revenues during the mentioned period.

The Saudi market index is often compared to Gulf market indices such as the Abu Dhabi Index (ADX) and the Dubai Financial Market (DFM), due to the similarity of influencing factors such as oil prices and economic policies. It is also compared to global indices such as the S&P 500 and FTSE, especially after the Saudi market was included in global emerging market indices. While the Saudi market boasts strong liquidity and a focus on large companies, its diversity remains less than that of some global markets. Gulf and global investors monitor TASI as a benchmark for the performance of the largest economy in the region.

The Saudi market index (TASI) only covers companies listed in the main market, which are characterized by their large size, high liquidity, and adherence to strict disclosure standards. The Nomu index, on the other hand, is a parallel index that includes small to medium-sized companies with more flexible listing requirements. Growth companies do not enter TASI calculations, making the latter more accurate in representing the overall Saudi economy. For investors, TASI serves as a reference for long-term investment, while the Nomu index attracts those seeking higher growth opportunities with greater risks.

It is recommended to follow the official Tadawul website for real-time index data and periodic performance reports. Platforms such as Argaam, Riyadh Financial, and economic media provide comprehensive coverage of news about listed companies and impactful economic developments. The Capital Market Authority issues quarterly reports, while digital trading platforms offer detailed reports and analyses of index movements and sector performance. These sources contribute to raising investor awareness and helping them understand market trends without providing direct recommendations.

The Capital Market Authority and Tadawul place utmost importance on governance and raising transparency standards, as they impose mandatory periodic disclosure of results for listed companies, changes in capital, and substantive policies. The indices are updated periodically to reflect changes in the market, and weights are reviewed at every capital event. These measures ensure the accuracy and reliability of the index as a measure of Saudi market performance, enhancing the confidence of both local and international investors and attracting new capital to the market.