Pure Stocks in the Saudi Financial Market: Your Comprehensive Guide 2024-2025

Pure stocks are shares of companies that fully comply with Islamic Sharia principles in all their activities and financial transactions. This term is applied to companies that do not engage in any prohibited activities such as usury, gambling, the sale or production of alcohol, tobacco, or any forbidden products and services. Additionally, the company's financial transactions must be free from interest-based income, and the ratio of debt or prohibited investments must not exceed certain limits (typically 30-33% of total assets or revenues, according to Sharia board standards). In the Saudi market, the classification of "pure stocks" is based on annual or periodic reviews by accredited Sharia boards, such as the Council of Senior Scholars or Islamic Fiqh Academies, as well as renowned experts' lists like Dr. Mohammed bin Saud Al-Osaimi's list. Pure stock companies exempt investors from the need to purify their profits, as they are free from mixed or forbidden income. This distinction makes pure stocks highly attractive to a wide range of Saudi and Gulf investors seeking ethical and Sharia-compliant investments.

The classification of pure stocks is based on precise qualitative and financial criteria: First, the company's core activity must be permissible under Sharia, meaning its products or services do not include prohibited activities such as producing or selling alcohol, tobacco, gambling, or interest-based financial services. Second, financial criteria are applied, including setting specific limits for the company's debt or interest-based income in its financial statements; the ratio of interest-bearing debt must not exceed 30-33% of total assets, and forbidden income (such as bank interest) must be less than 5% of total company income. Sharia boards or Sharia advisors periodically review financial statements and company reports to ensure compliance with these standards. If a company exceeds these limits, it is classified as mixed or prohibited; if it fully meets the criteria, it is listed as a pure stock. These standards ensure investment integrity and alignment with Islamic values, enhancing investor confidence in the Saudi market.

From a Sharia perspective, stocks in the Saudi market are divided into three main types: (1) Pure stocks: These meet all Sharia conditions regarding activity and financing and do not require profit purification. (2) Mixed stocks: These companies have a permissible core activity but may have some forbidden income or expenses in their financial statements (such as income from bank interest or suspicious transactions), requiring investors to purify a specific portion of profits derived from such activities. (3) Prohibited stocks: These are companies whose main activity is forbidden by Sharia, or where forbidden income or interest-bearing debt exceeds allowed limits. It is important for investors to distinguish between these types when building their portfolios to ensure Sharia compliance, especially with the availability of approved lists that periodically clarify each stock's classification.

According to the latest data from specialized financial analysis platforms, the number of pure stocks in the Saudi market reached 251 by early 2025. Of these, 160 stocks are listed on the main market (Tadawul), and 91 stocks on the parallel market (Nomu). This figure reflects significant growth in the number of Sharia-compliant companies compared to previous years, driven by increased new listings and existing companies' efforts to adjust to Sharia standards. Pure stocks are distributed across key sectors, most notably energy, manufacturing, medical services, technology, and telecommunications. For example, companies such as "Saudi Aramco," "Basmat Adeem Medical," and "Wataniya Iron and Steel" are included in the list of pure stocks. This diversity offers investors multiple options to build Sharia-compliant investment portfolios, enhances market liquidity, and supports Islamic investment funds.

In the Saudi market, there are many companies classified as pure stocks. Notable examples include: (1) Saudi Aramco, one of the world's largest oil companies, whose stock is considered pure due to its reliance on oil and gas production and compliance with Sharia financial standards. (2) Basmat Adeem Medical Company, listed on the Nomu market with a trading price of about SAR 5.27 per share in 2025, operating in the healthcare sector without any prohibited activities. (3) Wataniya Iron and Steel Company, operating in manufacturing, with its share price around SAR 1.69. (4) Asq Plastic Factory Company, with its share trading at about SAR 44.30. (5) Digital Research Company in the technology sector, with a share price of SAR 29.86. These companies are real-life examples of implementing Sharia purity standards in the Saudi market and reflect the sectoral diversity of pure stocks.

Pure stocks are concentrated in several key sectors in the Saudi market. The energy and petrochemicals sector leads, as most of its companies rely on natural resource production and do not engage in prohibited activities, such as Aramco and SABIC. The manufacturing sector includes companies like Wataniya Iron and Steel and Asq Plastic Factory. In telecommunications, companies such as STC and Mobily stand out, adhering to legitimate technological activities. The healthcare and retail sectors also include pure companies like Basmat Adeem Medical and Saudi German Hospital. On the other hand, pure stocks are less common in conventional banking and non-Takaful insurance sectors due to their reliance on interest-based income or prohibited financial activities. This distribution allows investors to build diversified portfolios within the framework of Sharia purity and enhances long-term investment opportunities in strategic sectors.

With the growing demand for Sharia-compliant investment products, the Saudi financial market has seen the launch of indices and investment funds specialized in pure stocks. Notable examples include the Sharia-compliant Parallel Market Index, which tracks the performance of a group of pure stocks listed on the Nomu market. Additionally, exchange-traded funds and Islamic investment funds have been established that focus exclusively on pure stocks, offering investors opportunities to build collective investments characterized by transparency and Sharia compliance. These products make it easier for individual and institutional investors to gain exposure to a diversified portfolio of pure stocks without the need for individual research and scrutiny, and are subject to ongoing Sharia supervision, increasing their appeal and supporting the growth of this sector.

Traditional financial evaluation of companies is primarily based on performance indicators such as profitability, growth, valuation ratios (like P/E ratio), and liquidity. Sharia classification, however, adds strict religious criteria related to the nature of activity, sources of funding, and income. Some companies may be financially strong and attractive from a purely investment perspective, but if their activity or part of their income is forbidden by Sharia, they are not classified as pure stocks. Conversely, there may be companies with relatively lower profitability that fully comply with Sharia standards, making them preferable for investors seeking Sharia purity. This difference requires investors to balance both aspects and clarify their investment objectives before making decisions.

The importance of pure stocks stems from two main aspects: The first is full compliance with Islamic Sharia, providing investors with peace of mind and exempting them from any doubts or the need to purify profits. The second is the practical side, as pure companies often belong to essential productive and service sectors, granting them relative stability during crises and increasing community trust. Additionally, the rise of Sharia-compliant funds and indices boosts the liquidity and attractiveness of these stocks for both local and international investors. Pure companies also play a vital role in supporting Saudi Vision 2030 by diversifying income sources and promoting Islamic finance.

Pure stock lists undergo periodic review and updates by specialized Sharia boards, whether at the level of Fiqh academies or independent experts like Dr. Al-Osaimi. Companies' financial statements are regularly examined to ensure continued compliance with Sharia standards, taking into account changes in activity structure, revenues, and debts. If a company undergoes a significant change in its activity or financial ratios that causes it to exceed Sharia limits, it is moved from the pure stocks list to the mixed or prohibited list. The Capital Market Authority and regulatory bodies also play a role in providing financial data and transparency to facilitate review processes, ensuring investor interests and market integrity.

To verify the purity of a particular stock, investors can rely on several sources: First, Sharia-compliant lists published by accredited bodies such as Dr. Al-Osaimi's lists or financial analysis platforms like ledraa. Second, reviewing the company's financial reports to ensure its activities and revenues do not include forbidden activities or sources, and that debt or interest levels are within Sharia-allowed limits. Third, consulting Islamic investment experts or Sharia advisors at banks and investment funds, as most Islamic financial institutions have specialized departments for this purpose. Finally, following periodic updates from official Sharia boards or specialized indices that announce any changes in stock classification.

The Saudi pure stocks market has recently witnessed several important developments: the launch of new Sharia indices to track pure stock performance, expansion of listings in the parallel market (Nomu), especially in technology and healthcare, and an increase in Islamic investment products such as index funds and collective investment funds. Awareness campaigns about the importance of pure investing have intensified, prompting some existing companies to strengthen their commitment to Sharia standards to remain on purity lists. The participation of Islamic financial institutions in developing Sharia-compliant funds and activating Sharia supervision over innovative financial products are all indicators of the vitality of the pure stocks market in Saudi Arabia and its pivotal role in the future of investment.

Pure stocks align with the objectives of Saudi Vision 2030, which aims to diversify income sources and enhance the Kingdom's position as a global center for Islamic finance. By encouraging companies to adopt Sharia governance standards and attracting capital seeking clean investments, pure stocks help build a strong and sustainable financial sector. They also support the growth of Islamic investment funds and provide investment products suitable for all segments, enhancing market efficiency and supporting the national economy. This direction reflects the Kingdom's commitment to sustainable development and financial transparency while maintaining ethical and social values.