Saudi Market Index: Comprehensive Overview of Mechanism and Key Sectors

The Saudi Market Index, commonly referred to as TASI (Tadawul All Share Index), is the main index representing the performance of all companies listed in the Saudi financial market (Tadawul). Established in the 1980s, the index serves as a benchmark for the overall performance of the Saudi stock market, encompassing large, medium, and small companies listed in the main market. Its methodology is based on calculating the market capitalization-weighted value, where companies are weighted according to their market capitalization, meaning that movements of larger companies (such as Saudi Aramco) have a greater impact on the index's direction. The index value is updated every five minutes during official trading hours, providing a continuous and accurate picture of market movements and economic changes in the Kingdom. Local and international investors monitor the TASI index as a benchmark for financial performance, benefiting from data transparency and its widespread reliance in financial and economic analyses.

The Saudi Market Index (TASI) relies on a market capitalization-weighted methodology, which makes the weight of each company in the index proportional to its total market value. Market capitalization is calculated by multiplying the stock price by the number of freely traded shares of the company. This system reflects the extent of influence that large companies have on the index: if the stock price of a giant company like Saudi Aramco or Al Rajhi Bank rises, it leads to a noticeable improvement in the overall index, and vice versa when it declines. The Saudi Financial Market Authority automatically includes new companies in the index upon their listing, while excluding companies that are delisted, merged, or suspended for a long time. The weights of companies in the index change according to fluctuations in stock prices and the number of free shares, and they are updated periodically to ensure accuracy and objectivity in representing the market.

The TASI index includes all economic sectors represented by companies listed in the Saudi financial market. The oil, gas, and petrochemical sector leads in weight, thanks to companies like Saudi Aramco and SABIC. This is followed by the banking and financial sector, which includes major banks such as the National Commercial Bank and Al Rajhi Bank. The telecommunications sector is also influential, featuring Saudi Telecom Company (STC) and other smaller firms. Other sectors include basic materials, construction, retail, consumer goods, utilities, insurance, and technology and healthcare industries. This diversity reflects the trends of the Saudi economy under Vision 2030, where the government aims to diversify income sources and develop new sectors. The performance of each sector plays a pivotal role in driving or pressuring the index based on the results of major companies and local and international economic changes.

According to official data until the end of 2024, the Saudi Market Index closed at 12,036.50 points, achieving a slight increase of 0.58% compared to the end of 2023. The index recorded its highest annual close on March 21, 2024, at 12,835.65 points. Despite this slight increase, the total market capitalization of listed companies decreased to 10,200.24 billion Saudi Riyals (2,720.06 billion USD), a decline of 9.41% from the end of 2023. However, trading volume rose significantly to 1,862.33 billion Saudi Riyals, an increase of 39.70% from 2023, with the number of transactions rising to 128.57 million. These figures indicate that the market has experienced growth in activity and renewed demand despite global economic challenges, with the index continuing to fluctuate during the first half of 2025 around the levels at the end of 2024.

Companies with large market capitalizations play a pivotal role in determining the direction of the Saudi Market Index. A prime example is Saudi Aramco, which had a market capitalization of approximately 2.4 trillion Riyals at the end of 2024, making it the largest weight in the index. Other prominent companies include SABIC, the National Commercial Bank, Al Rajhi Bank, and Saudi Telecom Company (STC), where the performance of these entities directly reflects on the movement of the index. If these companies report strong financial results or announce high dividends, it often drives the index upward. Conversely, if they experience a decline in profits or are affected by fluctuations in oil prices or global monetary policies, the index may face downward pressure. Investors continue to closely monitor the movements of these companies as early indicators of the overall direction of the Saudi market.

The Saudi financial market faces strong competition from other Gulf markets such as Dubai (DFM), Abu Dhabi (ADX), Qatar (QE), Kuwait, and Oman, as these markets seek to attract local and foreign investors. Regionally, TASI is considered the largest in terms of market capitalization and liquidity, and it is viewed as a regional benchmark for emerging market performance. Globally, TASI's performance is compared to global indices such as the S&P 500, Dow Jones, and Euro Stoxx 50, as well as emerging market indices like MSCI Emerging Markets. The weight of the Saudi market in MSCI emerging market indices has increased, leading to a flow of more foreign investments and heightened international interest in the performance of the Saudi market. The strength of the local economy, oil reserves, and government programs such as Vision 2030 are key supporting factors enhancing the competitiveness of the Saudi market at the regional and global levels.

The Saudi financial market has witnessed numerous significant regulatory and legislative developments during 2024 and 2025. Among the most notable are updates to regulations aimed at attracting foreign investors, increasing the flexibility of ownership limits, and launching new investment products and funds. The listing procedures for new companies in the main market have been facilitated, with a focus on technology and tourism sectors. The Capital Market Authority has worked on developing trading infrastructure and adopting modern technologies such as blockchain and artificial intelligence. In terms of performance, some sectors such as banks and petrochemicals recorded record results in certain quarters of 2024, while energy companies were affected by fluctuations in oil prices. New companies have recently been listed across various sectors, reflecting the increasing diversity of the market. The Saudi market has also received growing recognition from international rating agencies, with its weight in global indices increasing and attracting additional foreign investments.

Since the launch of Vision 2030, the Saudi government has embarked on ambitious programs to diversify the economy and reduce dependence on oil. This has been clearly reflected in the components of the Saudi Market Index, as the market has seen new companies listed in sectors such as tourism, entertainment, technology, and healthcare, alongside enhanced investment in traditional sectors like energy and finance. The vision aims to encourage private sector companies to list in the financial market, expand the investor base, and develop financial products. Small and medium-sized enterprises have also been encouraged through the Nomu market, adding a new dimension to the market. These efforts have contributed to making the Saudi Market Index more representative of the diversity of the national economy, while the major sectors continue to maintain their influential weights.

The Saudi Market Index is directly affected by fluctuations in global oil prices, given the national economy's reliance on the energy sector. Additionally, global interest rate policies, particularly decisions by the U.S. Federal Reserve, play a crucial role in determining capital flows and stock movements in the Saudi market. Regional geopolitical events, such as conflicts in the Middle East or global developments (like the war in Ukraine), also impact investor confidence and oil prices, and thus the index. Despite these challenges, the Saudi government continues to support the economy through infrastructure projects and national investments, helping to stabilize the index relatively compared to other emerging markets. Monitoring these external factors remains essential for understanding the dynamics of the Saudi market and assessing its overall performance.

The Saudi financial market (Tadawul) provides an advanced electronic platform that allows investors and followers to view the performance of the Saudi Market Index in real-time, with updates every five minutes during official trading hours. Information about the index, stock prices, annual and quarterly reports, and sector analyses can be easily accessed through the official Tadawul website. Licensed trading platforms also offer applications and websites that allow for direct monitoring of the index and its changes. For international investors, many global financial data platforms (such as Bloomberg and Reuters) cover the Saudi index prices within emerging market indices. This real-time data provides a vital tool for analyzing trends and estimating liquidity and market changes, but it does not replace the need for studying the fundamental and financial analyses of various companies and sectors.

In addition to the general index (TASI), the Saudi financial market provides sectoral indices that reflect the performance of each sector individually, such as banking, energy, telecommunications, basic materials, and others. These indices help investors analyze sector performance separately and identify trends. The performance of TASI is also compared with indices of other Gulf markets (such as Dubai or Qatar) as well as global market indices (S&P 500, Dow Jones, MSCI). These comparisons allow investors to assess the efficiency of the Saudi market and geographic diversification strategies. It is noteworthy that the Saudi market is the largest in the Middle East in terms of market capitalization and liquidity, and it has garnered increasing interest from international investors after being included in MSCI and FTSE emerging market indices.

The Saudi financial market has seen significant growth in foreign investor participation after gradually opening the door to them and increasing permissible ownership limits, especially in leading stocks. This has led to increased liquidity and attracted new capital to the market, contributing to the stabilization of the index and increasing market depth. Local investors have also diversified their investments, with a growing trend towards non-oil sectors and diversified investment funds. The market has launched new products such as sukuk, exchange-traded funds (ETFs), and real estate investment trusts (REITs), providing broader options for investors. This balance between local and international investors enhances market dynamics and makes it more attractive for long-term investment.

Official financial reports issued by the Saudi financial market and the Capital Market Authority serve as the primary source of accurate information regarding the general index, sector performance, and financial data of listed companies. Investors and followers can rely on these reports to understand general trends, evaluate companies, and study the impact of economic and political events on the market. These reports provide extensive data on trading volume, market capitalization, aggregated profits, dividends, and the performance of different sectors. Analytical platforms such as Argaam and specialized economic websites also contribute daily analyses and comparisons with regional and international markets, helping to build a comprehensive picture of the Saudi market. It is essential to continuously review this data while consulting a licensed financial advisor before making any financial decisions.