Trading Platform: A Comprehensive Guide to the Saudi Financial Market

The Trading Platform is the official name of the Saudi financial market and serves as the essential infrastructure for organizing the buying and selling of securities in the Kingdom. Since its establishment in 2007, the Trading Platform has become the financial hub that brings together listed companies, individual investors, and institutions under one roof, with a strict commitment to transparency and fairness under the supervision of the Capital Market Authority (CMA).

The importance of the Trading Platform stems from its vital role in financing national companies through public offerings and capital raising, while simultaneously providing high liquidity for stocks and offering investors the opportunity to diversify their investment portfolios. Market indicators such as the TASI index reflect the economic performance of Saudi Arabia, as stock prices and trading volumes mirror the flow of capital and investor confidence in the local economy.

The Trading Platform is not limited to stocks alone; it also includes sukuk, investment funds, and derivative products, enhancing the variety of financial instruments available in the local market. Recent technological advancements, such as the Trading 4.0 application, have improved the speed and efficiency of transaction execution and provided broader access for investors both locally and globally.

With Vision 2030 projects and the expansion of the foreign investor base, the Trading Platform has become one of the largest financial markets in the region, surpassing many global markets in terms of market capitalization and the number of listed companies.

The Trading Platform operates through a comprehensive electronic system that allows investors to execute buying and selling transactions instantly during specified times of the week (usually from Sunday to Thursday). The process begins with opening an investment trading account with a licensed broker in Saudi Arabia, where the investor provides personal and financial information and agrees to the regulatory terms and conditions.

Once the account is activated, the investor can access the broker's electronic trading platform, which is directly linked to the central Trading Platform. Buy or sell orders for stocks, sukuk, or funds are placed and sent to the order management system in Trading. If there is a match between buy and sell orders, the transaction is executed based on real-time pricing (bid and ask prices).

The Trading Platform uses a T+2 settlement system, meaning that funds settlement and stock transfer occur two business days after the transaction is executed. The platform also provides real-time data on prices, market depth, trading volume, and company reports, enabling investors to make informed decisions. The Capital Market Authority ensures the safety of operations by monitoring trades, combating manipulation, and ensuring accurate disclosures from listed companies.

The Trading Platform is directly overseen by the Saudi Capital Market Authority (CMA), which plays a pivotal role in establishing the rules governing the market and protecting investors' rights. The Authority's responsibilities include issuing executive regulations, monitoring financial disclosures, ensuring fairness and integrity in trading, and developing the investment environment to attract local and foreign capital.

The Authority regulates initial public offerings (IPOs) and imposes strict governance and transparency standards on listed companies. It also issues periodic instructions regarding financial disclosure, dealings with related parties, and disclosing significant events such as mergers or acquisitions. In cases of manipulation or violations, the Authority has the power to impose fines, suspend trading of stocks, or even cancel listings.

The Authority also works on market development through technical initiatives (such as fractional investing, expanding the base of foreign investors) and supports financial literacy programs to protect individual investors from unstudied risks. All these measures aim to enhance investor confidence and ensure the sustainability of a strong and transparent financial market.

The TASI index is the main index of the Saudi financial market, measuring the overall performance of all listed companies in the main market. This index allows investors to track market developments daily, as it is influenced by stock price movements, trading volume, and the performance of various economic sectors.

In addition to TASI, there are sub-indices that measure the performance of specific sectors such as banking, petrochemicals, telecommunications, and industry (including the cement sector). The Trading Platform has also launched specialized indices such as the Saudi Dividend Yield Index, which focuses on companies with regular dividend distribution policies.

These indices are used as benchmarks for financial analysis, evaluating the performance of investment portfolios, and comparing the performance of different companies or sectors. Exchange-traded funds rely on these indices to determine their portfolio components, helping to diversify investments and reduce risks.

The Saudi financial market is one of the largest regional and global markets in terms of market capitalization, which exceeded $2.5–3 trillion (over 10 trillion Saudi Riyals) in 2024. The platform includes more than 210–220 listed companies, distributed across various sectors including energy, banking, telecommunications, industry, basic materials, and petrochemicals.

The petrochemical sector holds a prominent position thanks to companies like Aramco and SABIC, followed by the banking and industrial sectors, which include cement and steel companies. The telecommunications sector is experiencing rapid growth amid digital transformation, while industrial sectors continue to support infrastructure and housing projects within the framework of Vision 2030.

It is noted that the Saudi market has attracted significant foreign investments after opening the door for foreign investors and integrating with neighboring Gulf markets. Major development projects such as NEOM and Qiddiya remain a driving factor for growth in trading volume and the number of listed companies in the coming years.

The cement sector is considered one of the cornerstones of the Saudi industry, playing a pivotal role in meeting the needs of housing and infrastructure projects. The sector includes more than ten major companies, distributed across various regions of the Kingdom to cover local demand and reduce logistics costs.

The sector has witnessed notable growth in recent years, supported by an increase in new city projects, housing, and infrastructure development under Vision 2030. However, the sector faces challenges such as fluctuations in energy prices, seasonal demand volatility, and intense local competition among companies. Additionally, the occasional surplus in production capacity puts pressure on profit margins.

Cement companies are striving to improve their operational efficiency through geographic expansion, resource consolidation, and the use of modern technologies to reduce energy consumption and emissions. Among the prominent strategies in the sector are mergers and acquisitions, as recently occurred between Qassim Cement and Hail Cement, to enhance competitiveness and reduce costs.

Hail Cement Company (symbol in the Trading Platform: 3001) was established to meet the growing demand for cement in northern Saudi Arabia, particularly in the Hail region and neighboring provinces. The company's activity focuses on the production of gray cement used in construction, benefiting from the availability of raw materials in the area such as limestone and clay.

Throughout its operational years, the company has adopted a regional expansion strategy to meet the needs of infrastructure and housing projects, focusing on production efficiency and product quality. Despite its medium position among sector companies, Hail Cement has achieved clear growth during the construction boom from 2021 to 2023, although it has faced increasing challenges in terms of rising costs and competition from larger companies such as Qassim Cement and Yamama Cement.

Before the acquisition, Hail Cement followed a limited cash dividend distribution policy, focusing on enhancing capital and developing production facilities. These policies played a role in attracting a segment of investors seeking relative stability in dividends within the industrial sector.

The financial indicators for Hail Cement Company (3001) reflect its market position prior to the acquisition. The last share price before the announcement of the acquisition deal was approximately 10.5 Saudi Riyals. The total market capitalization of the company was around 1.1 billion Saudi Riyals (approximately $0.29 billion).

The price-to-earnings (P/E) ratio was relatively high, reflecting profit pressures due to fluctuations in selling prices and rising operating costs, with the company's earnings ranging from stability to decline in some quarters. The cash dividend yield was around 5–8% of capital in the years leading up to 2024, dropping to its lowest levels before the acquisition due to the company's readiness for closure and asset consolidation.

Despite these figures, the company maintained its presence in the local market, benefiting from regional demand for building materials. The acquisition deal represented a turning point in its financial and strategic trajectory.

In August 2024, official entities announced the completion of Qassim Cement's acquisition of Hail Cement for a value of approximately 1.41 billion Saudi Riyals ($378 million). This acquisition resulted from a merger strategy aimed at enhancing production capacity and reducing operating costs by consolidating resources in northern Saudi Arabia.

The deal involved cash payments to Hail Cement shareholders in exchange for their shares, and Hail's stock (3001) was delisted from the Trading Platform after completing all regulatory procedures. The Capital Market Authority allowed the operation to proceed within legal frameworks and issued a circular regarding the delisting of the stock and the closure of the company's final books.

Qassim Cement is expected to gain significant benefits from Hail's production facilities and expand its market share in the cement sector. Hail's shareholders received fair cash compensation according to the valuation of the deal, while the stock is no longer available for trading in the Saudi market after August 2024.

The Saudi cement sector includes several major companies competing for market shares in various regions of the Kingdom. Among these companies are Qassim Cement (the acquirer of Hail), Yamama Cement, Southern Cement, Najran Cement, Eastern Cement, and Cement Industries.

Major companies resort to geographic expansion strategies, mergers and acquisitions, and improving production efficiency to face market challenges such as demand fluctuations and rising operating costs. Qassim Cement's acquisition of Hail is an example of the sector's trend towards consolidation to reduce direct competition and benefit from economies of scale.

On the other hand, the local market remains the primary driver of demand for cement amid housing and infrastructure projects. Foreign competition remains limited due to regulatory barriers and transportation costs, with some partnerships with global companies such as Lafarge and Holcim.

In recent years, the Trading Platform has witnessed significant technological advancements, most notably the launch of Trading 4.0, which has enhanced the speed of order execution and increased the platform's capacity to handle large trading volumes efficiently. New services such as fractional investing, enabling trading for exchange-traded funds, and linking the market with neighboring Gulf markets under the unified market initiative have also been introduced.

These developments facilitate access for individual and institutional investors to a variety of financial instruments and provide real-time data and advanced analytics to aid in making informed decisions. These technologies also support enhanced transparency, reduce human errors, and improve the user experience for both local and international investors.

The listing of companies on the Trading Platform is subject to strict procedures that ensure transparency, financial solvency, and compliance with governance standards. The process begins with the company submitting a listing application to the Capital Market Authority, along with detailed financial data and audit reports. After approval, shares are offered for public subscription, and the listing price is determined.

Delisting of shares usually occurs in cases of mergers or acquisitions or when a company violates regulatory standards. The delisting decision is announced after all financial and legal procedures are completed, and shareholders are compensated according to the value of the deal or the liquidation of the company's assets. In the case of Hail Cement Company, the stock was delisted following the acquisition by Qassim Cement, and shareholders received cash compensation according to the valuation of the deal.

Expectations indicate continued growth for the Saudi financial market driven by Vision 2030 projects, the expansion of new listings, and support for foreign investor participation. Key sectors such as petrochemicals, banking, and industry are expected to remain at the forefront of sectors influencing overall indices.

In the cement sector, mergers and acquisition deals are likely to reduce direct competition among producers and achieve relative price stability. However, challenges will remain for small and medium-sized companies, which will need to enhance their operational efficiency to cope with global economic fluctuations such as energy prices and supply chains.

The sustainability of the Saudi market depends on developing financial products, increasing transparency, and adopting the latest technologies to ensure high liquidity and efficiency in trading. Additionally, enhancing financial literacy programs for individual investors will remain a vital factor in protecting capital and attracting new investments.