Saudi Index: Detailed Explanation of the Saudi Financial Market Index and Its

The Saudi Index, officially known as the Tadawul All Share Index (TASI), represents the main index that reflects the performance of all companies listed in the Saudi financial market (Tadawul). The index measures the change in the market capitalization of listed stocks, calculated according to a market capitalization-weighted methodology, meaning that the weight of each company in the index is determined based on its market value relative to the total market. This method makes the index an effective and transparent tool for monitoring overall market changes, regardless of small individual stock movements. The concept of the Saudi Index began with the expansion of the Saudi financial market to serve as a mirror of the national economy's movement and the strength of Saudi companies. Over time, the index has become a primary reference for investors, decision-makers, and regulatory bodies, reflecting not only the performance of companies but also the level of liquidity, capital flows, and confidence in the future of the Saudi economy. With the market opening to foreign investors and the inclusion of the Saudi market in global emerging market indices, the weight of the Saudi Index in international investment decisions has increased, directly attracting foreign investments to the Kingdom. The index's role is not limited to monitoring; it is also used as a basis for building financial products such as exchange-traded funds (ETFs) and investment funds, while analysts rely on it to evaluate market trends and formulate investment strategies. Thus, the importance of the Saudi Index as a key driver of the financial and economic landscape in the Kingdom is evident.

The calculation of the Saudi Index (TASI) is based on the market capitalization weighted for all stocks listed in the main market. The basic method involves summing the market values of each company (number of free shares multiplied by the stock price), then dividing this total by a historical reference value (usually at the establishment of the index or after any structural adjustments). When the index was established, the reference base was set at 100 points, and since then, growth or decline is measured as a percentage of that base. With each change in stock prices or increase/decrease in the number of listed companies, the index is automatically recalculated to reflect these changes. Tadawul periodically adjusts the weights of companies, especially during initial public offerings or changes in capital, ensuring the accuracy of the index and preventing it from being overly affected by the movements of a single large stock. Additionally, some inactive stocks or those significantly owned by government institutions or founders are excluded to ensure that the index reflects only the free tradable stocks. This calculation approach allows the index to represent the true market and reduces valuation distortions resulting from individual or unusual movements. Furthermore, company weights are updated at least quarterly, with the possibility of exceptional adjustments when necessary, such as mergers, acquisitions, or regulatory exceptions. Thus, the index maintains its role as an accurate measurement tool for the overall market and is comparable over time and with global indices. Finally, Tadawul publishes the index calculation equations and company weights periodically and transparently, enhancing trust and transparency among investors.

The Saudi Index consists of a wide range of economic sectors that reflect the diversity of the national economy, although some sectors carry greater weight in the index calculation. The banking sector leads, comprising the largest Saudi banks such as Al Rajhi Bank, National Commercial Bank, and Riyad Bank, which dominate a significant share of the index's market capitalization. The energy and petrochemical sector also forms a backbone of the index, particularly with the presence of Saudi Aramco (2222), one of the largest companies in the world by market capitalization. Additionally, sectors such as basic materials (cement, metals, chemicals), consumer goods, telecommunications (such as STC), and services hold substantial shares in the index. Each of these sectors affects the index to varying degrees, depending on the size of the companies listed within them and their trading values. For example, in cases of oil price fluctuations or changes in monetary policies, sharp movements may be observed in the stocks of the energy or banking sectors, significantly reflecting on the overall index. The basic materials sector is usually influenced by government infrastructure and construction projects, making the performance of cement and metals companies an indicator of real economic activity. Additionally, the parallel market sector (NOMU), which includes small and medium-sized companies, has its own independent index but contributes to the overall market dynamics. This sectoral diversity enables the Saudi Index to reflect a realistic picture of the national economy and provides investors with diverse options based on risk levels and targeted sectors.

The Saudi Index experienced noticeable volatility during 2024 and 2025, with a slight downward trend amid fluctuating global economic conditions and local liquidity pressures affecting some sectors. By the end of the first quarter of 2025, the general index (TASI) recorded a level of 12,025.05 points, down 3.04% compared to the same period in 2024. The decline continued to reach 11,163.96 points by the end of the first half of 2025, representing a decrease of 4.41% from the end of the previous year's first half. The highest level recorded during this period was around 12,471 points on February 10, 2025, before facing selling pressures that led to a decline of about 4-5% from that peak. These movements reflect several factors, including changes in global oil prices, shifts in international monetary policies, and a decrease in risk appetite among investors. Additionally, the increase in the number of listed companies and the issuance of new shares in the market contributed to increased supply, putting pressure on the prices of some leading stocks. In terms of market capitalization, the total value of listed stocks decreased from 9,918.69 billion riyals at the end of the first quarter of 2025 to 9,126.04 billion riyals at the end of the first half, marking an annual decline of 9.3%. Trading values also saw a significant decline, amounting to 362.59 billion riyals in the first quarter of 2025 (down 37% from the previous year) and 688.09 billion riyals in the first half (down 32.76% year-on-year). This decline in liquidity and trading volume reflects a cooling in investor sentiment, possibly due to economic uncertainty or shifting investment priorities. Nevertheless, the Saudi Index remains among the highest regional indices in terms of market capitalization and liquidity, confirming the robustness of the national economy, while also highlighting the importance of closely monitoring the factors influencing market movements.

Market capitalization and trading volume are among the most important indicators reflecting the health and strength of the Saudi financial market. In 2025, official data showed a decline in the total market capitalization of listed stocks, decreasing from 9,918.69 billion Saudi riyals at the end of the first quarter to 9,126.04 billion riyals at the end of the first half of the same year, representing an annual decline of approximately 9.3%. This decline is attributed to several reasons, primarily the decrease in prices of some leading stocks, along with the increase in the number of listed companies, which raised the supply of shares. On the other hand, trading volume witnessed a noticeable decline, with the total value of traded stocks during the first quarter of 2025 reaching about 362.59 billion riyals, representing a decrease of 37% compared to the same period in 2024. During the first half of the year, trading volume amounted to 688.09 billion riyals, down 32.76% from the same period in 2024. These data indicate a relative decline in investor activity, possibly due to increasing caution stemming from global economic variables or local market valuations. Additionally, the number of shares traded decreased by about 27.55% in the first quarter of 2025 compared to the previous year and by 25.53% in the first half, with the number of executed transactions declining by 6.89% to 59.73 million transactions. This decline reflects an atmosphere of anticipation and caution prevailing in the market, which may be influenced by factors such as geopolitical tensions, changes in interest rates, or regulatory adjustments. Despite these declines, the Saudi market retains its attractiveness as the largest market in the region, driven by its depth, liquidity, and growing presence in global indices.

The movement of the Saudi Index is influenced by a wide range of internal and external factors, making it sensitive to economic and financial changes at both local and global levels. Among the most prominent local factors affecting it are the performance of key sectors such as banking and energy, the results of listed companies, government policies, and regulatory developments issued by the Capital Market Authority. For instance, any change in the profits or distributions of leading companies directly affects their weight in the index and thus its overall value. Moreover, major infrastructure projects under Vision 2030 play a pivotal role in supporting sectors such as basic materials and construction, which is reflected in the index through increased demand for stocks linked to those sectors. On the external side, global factors such as oil prices (as the Kingdom is the largest oil exporter), fluctuations in international financial markets, global interest rates, and changes in foreign investment policies all affect capital flows and liquidity in the Saudi market. The inclusion of the market in global indices like MSCI and FTSE has led to increased interconnection with international markets, making the index more susceptible to movements in global investment portfolios and sudden changes in global financial policies. Additionally, geopolitical conditions, changes in commodity prices, and global monetary and fiscal policies all play a role in determining the general direction of the Saudi Index. In light of these factors, tracking the index and analyzing its components becomes vital for understanding the dynamics of the Saudi market and realistically predicting future trends.

In addition to the general Saudi Index (TASI), there are several sub-indices that play a crucial role in reflecting the performance of specific sectors or market segments. Among the most prominent of these indices is the TASI50 Index, which tracks the performance of the top 10 listed companies by market capitalization, along with sectoral indices that monitor movements in sectors such as banking, energy, basic materials, telecommunications, and consumer goods. These sub-indices help investors evaluate sector performance independently of the general index, providing an important reference for building specialized investment strategies. The parallel market (NOMU) is an independent market dedicated to small and medium-sized companies, characterized by less stringent listing requirements compared to the main market. The parallel market has its own independent index (Nomu Capped Index) that reflects the performance of the companies listed within it, allowing investors to monitor the growth of this segment and compare it with the main market. The NOMU market has seen significant development in recent years with the listing of new companies, providing diverse investment opportunities for investors seeking rapid growth. Additionally, sub-indices are used by fund managers and financial institutions to assess the relative performance of sectors and identify strengths and weaknesses in the market. The listing of new companies in these indices increases the inclusivity of the Saudi Index and reflects the market's dynamism and ongoing development. Overall, sub-indices and the NOMU market play an important role in deepening the Saudi market and expanding the investor base while enhancing transparency and diversity of investment options.

The Saudi financial market has undergone a qualitative shift in recent years following its inclusion in global emerging market indices such as MSCI and FTSE. This was done gradually since 2019, allowing the Saudi market to appear for the first time in global investment portfolios and become part of international fund strategies. This inclusion has direct and indirect effects on the Saudi Index, the most important of which are increased foreign capital inflows into the market, expanding the investor base, and enhancing liquidity. Global funds that track MSCI or FTSE indices are now required to purchase Saudi shares as part of their portfolios, leading to increased trading rates and elevated valuations for some leading stocks. Furthermore, this inclusion has increased the correlation between the Saudi Index and global markets, making TASI movements partially influenced by international capital trends, global monetary policies, and oil price changes. From a regulatory perspective, the listing requirements for these indices have prompted the Saudi market to develop its infrastructure, adopt the highest standards of transparency and disclosure, and improve investor protection. These changes have strengthened the position of the Saudi Index as a global reference, giving it greater weight in international investors' decisions. However, this openness also presents challenges, such as increased market sensitivity to global fluctuations, necessitating close monitoring of external factors and their impact on the local market. Overall, the inclusion of the Saudi market in global indices has been a strategic step that has enhanced the market's depth and attractiveness, making the Saudi Index an integral part of global capital movements.

The cement sector in the Saudi market is one of the foundational pillars of the basic materials sector, playing a pivotal role in supporting construction and infrastructure projects, especially amid the momentum witnessed in the Kingdom under Vision 2030. The sector includes several major companies such as Yamama Cement, Qassim Cement, Southern Cement, Madinah Cement, and Hail Cement (3001), among others. The sector is highly sensitive to local demand, which is directly affected by the volume of government and private projects, such as housing, roads, and mega-projects like NEOM and Qiddiya. In recent years, the sector has faced intense competition among companies, with a relative oversupply compared to demand, putting pressure on prices and profit margins. Nevertheless, the sector has been characterized by a relatively stable dividend policy, as major companies prefer to maintain a rewarding return for shareholders even during downturns. Additionally, the sector enjoys flexibility in exporting to neighboring markets, providing companies with the opportunity to compensate for declining local demand through exports. Data indicates that the performance of cement companies was varied in 2024 and 2025, with some facing weak orders and slow project progress, while others benefited from improved operational efficiency and cost reductions. Overall, the cement sector remains a key component of the Saudi Index and an important indicator of real economic activity in the Kingdom, especially during periods of increased government spending on infrastructure.

Hail Cement Company (3001) is a prominent example of industrial companies listed in the Saudi financial market, providing a model for studying the impact of economic and sectoral factors on the performance of stocks listed in the Saudi Index. Established in 1981, the company produces cement and clinker in the Hail region and southern Saudi Arabia. Hail Cement has witnessed significant growth in recent years with the expansion of national development projects, although it has been affected like other companies by fluctuations in cement demand during 2024 and 2025. The price of Hail Cement shares ranged between 90 and 100 riyals at the beginning of 2024, with a market capitalization of approximately 6-7 billion riyals, then the stock moved within a range of 80-110 riyals during 2025 due to weak orders and slow progress on some infrastructure projects. Financially, the company recorded a price-to-earnings (P/E) ratio of 9-10 times at the end of 2023, with an average annual profitability between 10-12% of the book value. The company maintained a generous cash dividend distribution policy, at a rate of 5-6% of the nominal value annually, which attracted investors seeking stable periodic income. In terms of financial solvency, the company has a solid financial structure, with moderate debt-to-equity ratios, providing it with flexibility to face market fluctuations. Its main competitors include companies such as Umm Al-Qura Cement, Qassim Cement, and Southern Cement, which compete for government contracts and major projects. Overall, the experience of Hail Cement reflects the ability of Saudi industrial companies to adapt to changes and the importance of the sector in supporting the Saudi Index and overall market performance.

The Saudi cement market is characterized by a large number of competing companies, creating a dynamic environment that directly affects prices and profit margins. Among the prominent players in the market are Umm Al-Qura Cement (3009), Southern Cement (3008), Eastern Cement (3003), Qassim Cement (3012), Madinah Cement (3004), and Yamama Cement (3007), in addition to secondary companies such as Yamama Ceramics and Al-Fahd Cement. These companies compete to secure supply contracts for government and private projects, which include housing, roads, infrastructure, and mega-projects under Vision 2030. The surplus production capacity compared to local demand sometimes leads to price wars, with companies resorting to lowering selling prices or offering special deals to maintain market share. Additionally, changes in energy and raw material prices affect profit margins, while the ability to innovate and improve operational efficiency gives some companies a competitive edge. Expansion in exports, especially to neighboring countries, represents an opportunity for some companies to compensate for weak domestic demand, but it faces logistical and regulatory challenges. Financially, major companies stand out with stable and attractive dividend policies for investors, supporting their stock prices during stable periods. Overall, competition among cement companies remains one of the key factors shaping the dynamics of the sector and affecting the performance of the Saudi Index, especially given the sector's connection to major national development projects.

The Saudi financial market witnessed a series of important developments in 2025 that reflect the market's dynamism and its direction towards greater inclusivity and transparency. Among the most notable of these developments are the periodic maintenance operations for indices, where Tadawul conducts quarterly reviews of the weights of listed companies and updates the ratios of free shares, in addition to the listing of new companies, such as United Carton Industries and Flynas, which were added to the packaging and transport indices respectively. These strategic listings reflect the market's approach to increasing the diversity of the index and enhancing its inclusivity, providing greater opportunities for investors and expanding the market base. On the regulatory front, the Capital Market Authority continued its efforts to develop the investment environment by approving the listing of new companies in the parallel market, such as Khalid Dhafir and Brothers Logistics Services, enhancing market liquidity and increasing the number of listed companies. Additionally, the Saudi market experienced fluctuations in performance during the first half of 2025 due to global economic conditions such as inflation, the war in Ukraine, and plans to raise global interest rates, yet the continued implementation of Vision 2030 projects contributed to supporting some vital sectors such as construction and infrastructure. At the company level, Hail Cement maintained a stable dividend distribution policy, with no significant changes in its activity or projects during the mentioned period. Overall, these developments indicate that the Saudi financial market is in a state of continuous growth and change, with regulatory bodies keen on enhancing transparency and attracting local and international investments.

The Saudi Index serves as a mirror of the national economy, directly reflecting the strength of Saudi companies, the level of liquidity in the market, and the confidence of local and foreign investors in the Kingdom's economic future. An increase in the index is often interpreted as a sign of economic growth and financial stability, while a decrease may indicate challenges or pressures on companies or the economy as a whole. Practically, the index is used as a primary reference for evaluating the performance of investment portfolios, determining general market trends, and building financial products such as exchange-traded funds and index funds. Additionally, the stability of the index and the attractiveness of the Saudi market have contributed to attracting substantial foreign investments, especially after the market's inclusion in global emerging market indices. The Saudi financial market is viewed as a key financing tool for government and private projects, particularly amid privatization plans and economic reforms under Vision 2030. The market also provides a platform for small and medium-sized enterprises to grow and finance themselves, especially through the NOMU market. On the other hand, the index also influences economic policies, as the government relies on market performance to formulate its economic plans and assess the implementation of reforms. Decision-makers are keen to enhance the efficiency and transparency of the market to attract more investments and ensure sustainable economic growth. Overall, the Saudi Index represents a central pillar in the Kingdom's economic system and a foundation for attracting and directing capital towards vital sectors.

Monitoring the Saudi Index is of great importance for both individual investors and financial institutions, given its role as a primary indicator reflecting the state of the market and capital trends. For individual investors, the index provides a reference for understanding the overall market performance and assessing the success of their investment portfolios compared to the general market performance. It also helps them identify general trends, such as periods when the market is bullish or bearish, aiding them in making decisions based on objective data. For financial institutions and investment funds, the index is used as a basis for building financial portfolios, evaluating the relative performance of funds, and identifying strengths and weaknesses in their investment strategies. Additionally, exchange-traded funds (ETFs) and index funds primarily rely on the performance of the Saudi Index to determine the value of their units. From a regulatory perspective, the Capital Market Authority and Tadawul provide index data instantly and transparently through websites and periodic reports, enhancing market transparency and investor confidence. Furthermore, the inclusion of the Saudi market in global indices has increased the importance of the index as a comparative measure of market performance against international markets. Overall, monitoring the Saudi Index is a fundamental step for anyone looking to understand the dynamics of the Saudi market, assess opportunities and challenges based on accurate and objective data, while emphasizing the importance of consulting a licensed financial advisor before making any investment decisions.