Global Markets: Global Transformations and Their Impact on the Saudi Market and

The term "global markets" refers to the system of international financial markets that includes stock exchanges, bond markets, commodity and currency markets, as well as other financing and investment instruments. These markets are divided into two main types: advanced markets such as the New York, London, and Tokyo exchanges, and emerging markets such as the Saudi market (Tadawul), the Indian stock exchange, and exchanges in Latin American countries.

Global markets are the main compass of the global economy, determining capital flow trends and directly impacting the economic growth of countries. For instance, when major global stock indices rise, it often reflects accelerated economic growth and investor confidence, and the opposite is true in cases of sharp declines. On the other hand, commodity markets such as oil and gold reflect investor expectations regarding global growth, inflation, or geopolitical risks.

Global financial markets are increasingly integrated with technological advancements, making any event in a major country quickly affect other markets. For example, a decision by the U.S. Federal Reserve to raise or lower interest rates often leads to immediate fluctuations in most stock markets worldwide and affects capital flows to emerging markets like the Saudi market.

For Saudi Arabia, its connection to global markets is evident in the impact of global oil prices on the local budget, as well as the influence of liquidity changes and global risks on the "Tadawul" market. Furthermore, raising the foreign ownership limit in Saudi stocks has strengthened ties with major markets, making global investors consider the Saudi market as part of their investment portfolio. In summary, "global markets" are not just arenas for trading financial assets, but interconnected systems that influence and are influenced by each other, reflecting economic and financial trends worldwide.

The year 2024 witnessed a series of events that significantly affected global markets. Among the most notable factors was the shift in monetary policies of major central banks, which began to lean towards monetary easing as inflation rates declined in the United States and Europe. This trend restored some confidence to stock markets, with major indices such as the S&P 500 in the U.S. and the Euro Stoxx 600 in Europe rising by between 15% and 18% over the year.

In addition to monetary policies, geopolitical tensions played a pivotal role in shaping investor sentiment. The second quarter of 2024 saw an escalation in trade war tensions between some major powers, leading to a rise in the VIX volatility index on the Chicago Exchange, known as the "fear index," to its highest levels in years. These disruptions affected financial flows, forcing investors to reassess their risks in both emerging and developed markets.

In the same context, oil prices continued to fluctuate between $75 and $85 per barrel, driven by changes in global demand and OPEC+ balances, while gold prices experienced waves of increases as demand for it grew as a safe haven during periods of uncertainty. Emerging markets showed varied performance based on their exposure to global risks, with the Saudi market being one of the markets that relatively benefited from rising oil prices and stable foreign capital flows.

By the end of 2024, the overall picture of global markets leaned towards relative stability despite some fluctuations, with global economic growth reaching about 3% according to reports from the OECD. This performance contributed to enhancing the attractiveness of some markets, especially those that implemented structural reforms or benefited from rising global commodity prices.

As 2025 began, global markets continued their upward trajectory that started in late 2024, supported by hopes of interest rate cuts in major economies and improvements in macroeconomic indicators in many countries. Global stock indices such as the Dow Jones and NASDAQ reached record highs, with the Dow Jones surpassing the 38,000-point mark for the first time in its history. This rise was linked to a wave of confidence in the technology sector and investor optimism regarding the earnings of major companies.

Conversely, some markets remained susceptible to transient fluctuations due to mixed economic data or escalating geopolitical tensions in certain regions. When the global trade war crisis intensified in the second quarter of 2025, the VIX index saw a resurgence, temporarily affecting liquidity levels in financial markets and leading to some corrections in key indices. Additionally, commodity prices, particularly oil and gold, played a role in moving the markets, with Brent crude remaining between $80 and $85 per barrel, boosting revenues for oil-exporting countries like Saudi Arabia.

Gulf markets, led by the Saudi market, benefited from stable oil prices and increased foreign investments, especially after easing some restrictions on foreign ownership in leading stocks. In September 2025, the main index of the Saudi market recorded weekly gains of 5.1%, benefiting from positive local and global sentiment. However, some Gulf markets faced slight declines in October 2025 due to global economic uncertainty and the impact of international variables on certain sectors.

Overall, the first half of 2025 painted a picture of global markets characterized by a balance between growth opportunities and challenges associated with geopolitical risks and changes in global demand for commodities. This reality prompted investors to focus on geographic and sectoral diversification in their investment portfolios, closely monitoring developments in monetary policies and global commodity prices.

The Saudi market (Tadawul) is one of the largest financial markets in the Middle East, and its importance increases with the evolving interconnection between it and global markets. The channels of influence manifest through several key factors, most notably oil prices, decisions by global central banks, and foreign capital flows.

Global oil prices are the most influential factor in the Saudi economy and the local financial market. Any rise in oil prices leads to increased government revenues, positively reflecting on government spending and development projects, thus stimulating demand for Saudi stocks, especially in the construction and infrastructure sectors. For example, when oil prices stabilized between $75 and $85 per barrel in 2024 and 2025, the Saudi market witnessed a notable recovery in the performance of listed companies.

On the other hand, the policies of the U.S. Federal Reserve and European central banks directly affect liquidity flows to emerging markets. When interest rates rise in the U.S., capital tends to return to developed markets, leading to a decrease in liquidity in the Saudi market, and vice versa in cases of rate cuts. In 2024, expectations of monetary easing contributed to the stability of foreign investment flows to the Saudi market, especially after raising the foreign ownership ceiling in some leading stocks.

Geopolitical events significantly influence investor sentiment and trading volumes. Regional tensions or global crises may prompt investors to exercise caution and increase demand for defensive assets such as gold or government bonds. Conversely, relative stability in the region enhances the attractiveness of the Saudi market as a relatively safe investment destination amid global fluctuations. Thus, it can be said that the Saudi market is directly and indirectly influenced by movements in global markets, making it essential to monitor international developments when analyzing its performance or predicting its future movements.

Diversifying investments across global markets is one of the fundamental principles of modern portfolio management, especially amid increasing interconnections between financial markets. Investors, whether individuals or institutions, seek to distribute their assets across multiple countries and sectors to mitigate risks associated with focusing on a single market or sector.

The primary motivation behind this diversification is to reduce the impact of negative local events on the investment portfolio. For example, if the Saudi stock market experiences a sharp decline due to falling oil prices or negative economic data, having investments in foreign markets can offset some of these losses if those markets perform better during the same period.

Additionally, diversification allows for capitalizing on growth opportunities in both emerging and developed markets. While advanced markets provide stability and moderate profitability, emerging markets may achieve higher growth, albeit with higher risks. Investing in commodity and currency markets also allows for hedging against currency fluctuations or inflation.

In Saudi Arabia, diversification has become more important with the opening of the financial market and the increase in foreign ownership, as local investors have become more aware of the need to distribute risks geographically and sectorally. Foreign investments through investment funds and financial institutions have increased, and it has become common to find Saudi investment portfolios containing U.S., European, and Asian stocks in addition to local assets.

It is important to emphasize that diversification does not eliminate risks entirely, but rather helps manage them more effectively. Moreover, selecting the right markets and sectors requires in-depth study of economic, geopolitical conditions, and the nature of listed companies in each market. Therefore, it is always recommended to consult a licensed financial advisor when building or adjusting an internationally diversified investment portfolio.

Global stock indices play a pivotal role in measuring the health and performance of both the global and local economies. Among these indices, the S&P 500 in the United States, the FTSE 100 in the United Kingdom, the Nikkei 225 in Japan, and the Dow Jones Industrial Average stand out. Each index represents a basket of leading stocks in its country or region, reflecting the performance of these companies collectively.

Investors and decision-makers use these indices as benchmarks to evaluate the performance of investment portfolios, and they are also essential tools for tracking market trends. For example, if the S&P 500 index rises by 10% in a given year, it indicates an overall improvement in the profitability of major U.S. companies and increased investor confidence in the U.S. economy. Conversely, a decline in the index may reflect a decrease in corporate profits or increased economic risks.

During 2024 and 2025, most global indices recorded positive performance driven by improved monetary policies and declining inflation. The S&P 500 reached new historical levels, while a wave of innovation in the technology sector supported the growth of the NASDAQ. In Europe, the Euro Stoxx 600 rose, bolstered by strong earnings results from several major companies, particularly in the luxury goods and defense sectors.

For investors in emerging markets like Saudi Arabia, monitoring these global indices is crucial for understanding capital flows and identifying investment opportunities and potential challenges. When global indices trend upward, liquidity often flows into emerging markets in search of higher returns, and the opposite is true in cases of decline or increased risks. Therefore, tracking global indices is an essential part of the investment decision-making process in the Saudi market.

The cement sector is one of the vital sectors in the Saudi economy, given its pivotal role in supporting infrastructure projects and urban development. The sector has witnessed accelerated growth over the past decade, driven by Vision 2030 programs and major projects such as NEOM, the Red Sea Project, and the expansion of the Two Holy Mosques. The total production capacity of Saudi cement companies is about 74 million tons annually, compared to a local demand of nearly 60 million tons.

Recent years (2024-2025) have been marked by notable activity in the cement sector, especially with the return of government spending on development projects following the COVID-19 pandemic. Additionally, the sector has seen a wave of mergers and acquisitions, most notably the acquisition of Hail Cement Company by Qassim Cement Company in 2024 for approximately 1.42 billion SAR. This movement has enhanced market concentration and improved operational efficiency in major companies.

Among the main challenges facing the sector are fluctuations in energy and raw material prices, as the industry heavily relies on the availability of fuel and electricity at competitive prices. Moreover, intense competition among local companies, along with the occasional entry of imported products, necessitates continuous innovation and cost reduction to maintain profitability. On the other hand, some companies have begun investing in the production of environmentally friendly cement in response to regulatory pressures and the growing demand for sustainable products.

Financially, Saudi cement companies recorded an increase in profits during the first nine months of 2024, supported by rising demand and stable selling prices. The sector is expected to continue its positive performance in the medium term, especially with the ongoing implementation of government projects and increasing demand for construction materials.

Hail Cement Company was established in 1980 as a Saudi joint-stock company to meet the growing demand for cement in the Hail region and the northwest of the Kingdom. Its main plant has a production capacity of about 1.5 million tons annually of clinker, making it a key supplier of cement in those areas. The company primarily relied on the local market, with some limited exports to neighboring markets.

The company's performance in recent years has been characterized by fluctuations linked to local market conditions and the macroeconomy. In 2022, the company achieved revenue growth due to increased government construction projects, with an operating profit margin ranging between 20% and 25%. However, in 2023, revenues saw a slight decline due to a slowdown in demand following the COVID-19 pandemic. Regarding distributions, the dividend payout ratio was around 10% to 12.5% in the years 2020-2022, but it was suspended after the announcement of the acquisition deal with Qassim Cement Company.

In terms of valuation, Hail Cement Company's price-to-earnings ratio ranged between 15 and 18 times before the acquisition, which is lower than the rates recorded in some major companies due to the company's medium size and market anticipation of the deal. The stock price in mid-2024 was around 52-55 SAR, giving the company a market value of approximately 1.1 to 1.4 billion SAR before the stock was withdrawn from trading. After the acquisition was completed in August 2024, the company was no longer listed on the market and became part of Qassim Cement Company's operations.

Historically, Hail Cement Company was not part of major international or regional indices due to its relatively small size, but it played an important role in meeting local demand and maintaining stability in the cement market in the northern region of the Kingdom.

The cement sector in Saudi Arabia comprises about 8 major companies that compete to meet local demand and contribute to limited export projects. The main competitors include Qassim Cement Company (which recently acquired Hail), Yanbu Cement Company, Al-Jubail Cement Company, and Sana'a Cement Company, which specializes in white cement. Production capacities vary among companies, with Qassim having a capacity exceeding 30 million tons annually after the acquisition, while Yanbu focuses on the western coast with a capacity exceeding 20 million tons.

Competition in the Saudi market is fierce, compelling companies to continuously improve operational efficiency and reduce costs to face any price pressures. In some years, the overall production capacity of the sector has grown faster than demand, leading to oversupply and pressure on profit margins, especially for smaller companies like Hail. In contrast, larger companies have leveraged their size advantages to negotiate raw material and energy prices, as well as their ability to execute larger export projects.

One important factor in the sector is the government's role in providing support for energy and financing, in addition to regulatory programs that raise the foreign ownership ceiling and support investment in the industry. The sector has also seen increased interest in developing environmentally friendly products, responding to global and local sustainability trends. Despite the challenges, the continuation of major projects under Vision 2030 provides a strong foundation for the sector's growth and ongoing attractiveness to investors.

The Saudi cement sector has witnessed a wave of mergers and acquisitions in recent years, the most notable being Qassim Cement Company's acquisition of Hail Cement Company in August 2024 for 1.42 billion SAR. These moves reflect companies' desire to enhance their market share, achieve economies of scale, and increase operational efficiency to face the growing challenges in the market.

Mergers enable companies to benefit from resource integration, reduce shared costs, and increase bargaining power with suppliers and customers. For example, after Qassim's acquisition of Hail, management and production operations were unified, leading to reduced expenses and increased capacity to meet demand in wider areas of the Kingdom. The deal also strengthened Qassim's position as the largest cement producer in northern and central Saudi Arabia.

On the other hand, these mergers alter the competitive dynamics in the market, making it difficult for smaller companies to compete with the larger merged entities. However, market concentration may help stabilize prices and raise profit margins, especially if accompanied by growing local demand. At the same time, challenges remain regarding the need to invest in innovation and environmental technologies to maintain the sector's competitiveness amid regulatory pressures and international requirements.

Overall, the wave of mergers and acquisitions in the Saudi cement sector reflects a strategic trend toward building strong entities capable of competing regionally and internationally while ensuring sustainable growth and profitability in the long term.

The cement sector in Saudi Arabia enjoys continuous government support, evident in the facilities provided for energy, financing, and tax exemptions for some companies. These policies aim to enhance the competitiveness of the local industry and increase its contribution to the national economy. The General Investment Authority has also launched initiatives to raise the foreign ownership ceiling in core companies to attract more foreign investments and stimulate innovation.

In recent years, the government has focused on updating the regulatory environment to keep pace with global developments, particularly concerning environmental sustainability. New requirements have been imposed to reduce carbon emissions and encourage companies to invest in clean production technologies. Some major companies have already begun developing production lines for environmentally friendly cement, benefiting from financing opportunities provided by local and international banks for green projects.

Among the future challenges facing the sector are fluctuations in energy and raw material prices and the need to comply with increasingly stringent environmental standards. Additionally, the gradual liberalization of the energy market may lead to rising operational costs, requiring companies to enhance efficiency and invest in modern technologies. On the other hand, the government's continued support for infrastructure projects under Vision 2030 provides a strong foundation for growing domestic demand for cement.

In summary, the regulatory environment in Saudi Arabia is a key supportive factor for the cement sector, but it also imposes challenges that require rapid and effective responses from companies to ensure sustainability and profitability in the future.

The Saudi cement sector witnessed several significant developments during the period 2024-2025 that affected market dynamics. Among the most notable events was the completion of Qassim Cement Company's acquisition of Hail Cement Company in August 2024, which led to Hail's stock being withdrawn from trading and its operations being fully integrated with Qassim. This merger represented a strategic step to enhance Qassim's market position and achieve economies of scale.

In terms of financial performance, Saudi cement companies recorded an increase in profits during the first nine months of 2024 compared to 2023, driven by rising demand for construction products and stable energy costs. This improvement boosted investor confidence in the sector, despite ongoing fierce competition among major companies. Qassim also announced plans to expand its logistics centers and upgrade the production lines of Hail's plant to enhance operational efficiency and expand export capacity.

Conversely, there were no significant regulatory adjustments in the sector during this period, except for the continued monitoring of prices by the General Authority of Zakat and Income and the Ministry of Energy to ensure market stability. There were also expectations of potential issuance of green bonds by Qassim to finance future expansions. On a broader market level, the Saudi stock exchange recorded a 15% increase in trading volumes in the first quarter of 2025, benefiting from increased foreign ownership in leading stocks.

Overall, recent developments in the Saudi cement sector reflected a trend towards greater integration among major companies, with a continued focus on operational efficiency and investment in innovation to meet local and international market demands.

Global commodity prices, primarily oil and gold, play a crucial role in shaping trends in Saudi financial markets. Given that the Saudi economy primarily relies on oil exports, any change in global oil prices directly reflects on the state's financial performance and subsequently on the local stock market.

In recent years (2024-2025), oil prices fluctuated between $75 and $85 per barrel, supporting Saudi budget revenues and contributing to increased spending on development projects. This stability in oil prices positively impacted the performance of listed companies in the Saudi market, particularly in the construction, infrastructure, and basic materials sectors such as cement. For example, cement companies experienced increases in sales and profits with the launch of major infrastructure projects under Vision 2030.

Gold, on the other hand, is considered a safe haven for investors during times of uncertainty or geopolitical crises. During periods of tension in global markets, gold prices rose, prompting some Saudi investors to increase their holdings of the precious metal as a means of hedging against market fluctuations. Conversely, investments returned to local stocks as global stability improved.

Overall, monitoring global commodity prices is essential for analyzing the performance of the Saudi market and predicting its future movements. Any rise or fall in oil or gold prices can significantly impact investor sentiment, available liquidity, and the performance of key sectors in the market.

In recent years, the Saudi market has witnessed significant developments in the size and type of institutional and foreign investments, driven by regulatory reforms and raising the foreign ownership ceiling in leading stocks. Foreign investors have become an increasing part of the ownership structure of stocks, especially after the Saudi market's inclusion in global emerging market indices such as MSCI and FTSE Russell.

This openness has attracted substantial foreign capital to the market, enhancing liquidity and raising governance and transparency levels. It has also increased the interconnectedness between the Saudi market and global markets, as foreign investors' movements are closely linked to changes in global monetary policies, commodity prices, and international geopolitical events.

In 2024 and 2025, expectations of monetary easing in major economies and stable oil prices contributed to the continued flow of foreign investments into the Saudi market. The market also benefited from increased demand for leading stocks, particularly in sectors related to infrastructure and energy. However, some flows remained susceptible to fluctuations during times of global tension or when negative economic data was released.

The role of institutional investment has also increased in the Saudi market, with pension funds, insurance, and local and international investment funds strongly entering the stock exchange. This diversity in the investor base has contributed to market stability and improved pricing efficiency, but it has also made the market more sensitive to global developments, necessitating the monitoring of global market performance when analyzing investment trends in Saudi Arabia.

Global markets and the Saudi market, in particular, face a range of challenges and opportunities in the coming years. Among the most prominent challenges are ongoing geopolitical fluctuations, changes in monetary policies in major economies, and volatility in global commodity prices. These factors may affect capital flows, economic growth rates, and the performance of listed companies in the markets.

Conversely, promising opportunities arise from technological advancements, the shift towards a digital economy, and increased integration among global markets. In Saudi Arabia, Vision 2030 projects provide a strong platform for growth in various sectors, particularly infrastructure, renewable energy, and financial technologies. Additionally, the continued regulatory reforms and raising the foreign ownership ceiling will enhance the market's attractiveness to international investors.

Other opportunities include investing in sustainable and environmentally friendly sectors, where there is a growing global demand for products and services that adhere to sustainability standards. Some Saudi companies have already begun developing green projects, which may open new markets and attract international financing.

Despite the challenges, the ability to adapt to changes, invest in innovation, and effectively manage risks remain crucial factors for achieving success in both global and local markets. It is important for investors and companies to continuously monitor international and local developments and consult licensed financial experts when making significant investment decisions.