Saudi Market: Comprehensive Analysis of Structure, Sectors, and Recent

The Saudi market has witnessed exceptional development since its official establishment in 2003, when the management of stock exchange operations was transitioned from direct government oversight to a semi-independent entity named "Tadawul." This transformation was a response to the modern requirements of financial market regulation, where a comprehensive legal and regulatory framework was established under the supervision of the Saudi Capital Market Authority (CMA). The market has been characterized since its inception by its ability to absorb economic changes and its commitment to listing companies representing the most prominent sectors of the Saudi economy. In the early years, the market was relatively closed to foreign investors, with participation limited to local investors, both individuals and institutions. Over time, especially after the launch of Vision 2030, the market began to adopt a policy of gradual opening to foreigners, increasing its depth and liquidity. Benchmark indices such as "TASI" were launched, and sectoral indices covering banking, industry, petrochemicals, and real estate were added, providing investors with precise performance measurement tools.

Over the past two decades, the Saudi market has seen significant listings, most notably the IPO of Saudi Aramco in 2019, which broke records and pushed the market capitalization to exceed 8 trillion riyals at certain times. Additionally, fast-growing startups have been listed through the parallel market "NOMU," providing a platform for small and medium-sized enterprises. This dynamism has been bolstered by regulatory reforms, such as requiring companies to disclose financial information quarterly and introducing modern electronic trading systems (NASDAQ OMX platform). These developments have had a profound impact on enhancing transparency and increasing the attractiveness of the Saudi market for local and international investors, making it a model to be emulated in the region.

The Saudi Capital Market Authority (CMA) plays a central role in regulating and supervising the Saudi market, representing the highest regulatory body that ensures the integrity and transparency of operations within the market. The authority was established under the Capital Market Law issued in 2003, aimed at enhancing transparency, protecting investors, and regulating trading practices in accordance with the best international standards. Among the authority's key responsibilities are: granting licenses to financial brokerage firms, monitoring periodic disclosures of listed companies, and issuing regulations and instructions that govern public offerings, IPOs, and shareholder rights.

Additionally, the authority imposes strict governance standards requiring companies to regularly report their financial results and disclose any significant events that may affect prices or shareholder rights. The authority continuously works to update regulations in line with global market developments, such as introducing Qualified Foreign Investor (QFI) rules and amending allowable foreign ownership ratios. In recent years, the authority has increased the frequency of investor awareness campaigns and developed systems to monitor unusual trading and prevent manipulation or trading based on insider information.

Moreover, the authority monitors the compliance of listed companies with sustainability and social responsibility standards and supports market trends towards disclosing environmental, social, and governance (ESG) risks, enhancing the confidence of global investors. It is noteworthy that the authority collaborates with other government entities such as the Ministry of Commerce and Investment and the Ministry of Finance to ensure the integration of financial and investment policies. This robust regulatory framework has been the cornerstone in making the Saudi market a safe and attractive platform for capital, raising its classification within global emerging market indices.

The "TASI" (Tadawul All Share Index) is considered the general and main index of the Saudi market, reflecting the overall performance of all listed companies in the main market. TASI serves as an effective measurement tool for investors, investment funds, and market watchers, as it is calculated based on the market capitalization of companies with adjustments according to the size of freely traded shares available. In 2024, TASI rose by approximately 5% to 10%, driven by growth in sectors such as banking and petrochemicals, reaching new record levels in terms of points and trading volumes.

In addition to TASI, Tadawul provides a range of sectoral indices that allow tracking the performance of key economic sectors. These indices include banking, basic materials (industry and petrochemicals), telecommunications, consumer services, real estate, and energy. For instance, the banking sector index may witness a noticeable increase during periods of financial stability and increased lending, while the basic materials index reflects fluctuations in commodity prices and input costs. The existence of these indices facilitates accurate comparative analyses between sectors for investors, enabling them to identify diversification opportunities or manage risks.

Additionally, other sub-indices include small and medium-sized enterprises listed in the parallel market "NOMU," which was launched in 2017 to support the listing of startups under less stringent conditions. The average price-to-earnings (P/E) ratio for the general index was about 18× in 2024, reflecting a balance between profit growth and stock prices. The integration between the main index and sectoral indices provides a comprehensive and dynamic picture of the developments in the Saudi market, enhancing investors' ability to make informed decisions amid economic changes.

The Saudi market encompasses a wide range of vital economic sectors, providing significant richness and diversity in investment opportunities. By the end of 2024, the number of companies listed in the main market reached approximately 210, distributed across key sectors such as banking (~10%), petrochemicals (~15%), telecommunications (~5%), basic materials and industry (~20%), real estate (~8%), consumer services (~12%), in addition to other sectors including energy, transportation, insurance, and retail. This distribution reflects the diversity of the Saudi economy and the ongoing government efforts to diversify national income sources and reduce reliance on the oil sector.

In terms of market weight, major companies such as Saudi Aramco (2222), SABIC, Al Rajhi Bank, National Commercial Bank, and Alinma Bank lead the list of the largest companies by market capitalization, with the top ten companies accounting for a significant portion of the total market value. The energy sector, led by Aramco, dominates the market in terms of value, followed by the banking sector, which benefits from financial stability and supportive monetary policies for growth.

The petrochemical sector, led by SABIC, plays a strategic role in supporting the Kingdom's exports and achieving a sustainable trade surplus, while sectors such as telecommunications (STC, Mobily) are highlighted amid rapid digital transformation. The real estate and consumer services sectors benefit from large housing projects and housing programs, in addition to the increasing population growth. Meanwhile, small and medium-sized sectors find in the parallel market "NOMU" a platform for financing and rapid growth.

This sectoral diversity allows investors to distribute their investment portfolios according to targeted risk and return levels, making the Saudi market a true reflection of the national economy in a phase of transformation and diversification.

Foreign investment in the Saudi market has seen significant development over the past decade, as the market has gradually transitioned from a state of closure to partial and then full openness to international investors. The real opening phase began in 2015 when qualified foreign investors (QFIs) were first allowed to enter the market and purchase shares of listed companies within a strict regulatory framework, including minimum asset requirements and registration procedures through licensed brokers.

Over time, under the umbrella of Vision 2030 aimed at attracting foreign capital and diversifying the investor base, the Saudi Capital Market Authority (CMA) gradually expanded the scope of foreign ownership, allowing foreign investors to own up to 10% of a company's capital by 2025, with the possibility of owning 100% in some non-strategic sectors such as services and industry. Procedures for opening investment accounts for foreign investors were simplified, transparency in disclosures was improved, and advanced protection systems were introduced to prevent manipulation or trading based on insider information.

These reforms have led to a noticeable increase in the volume of foreign liquidity within the market, with foreign trading values reaching record levels, contributing to enhancing market efficiency and reducing its volatility. Additionally, the inclusion of the Saudi market in global emerging market indices such as "Morgan Stanley (MSCI)" and "FTSE Russell" has facilitated the flow of investments from global index funds into the market. All these measures have made the Saudi market an attractive investment platform for foreign investors seeking growth opportunities in an organized emerging economy.

The performance of the Saudi market is closely linked to the macroeconomic environment of the Kingdom, particularly factors such as oil prices, fiscal policies, and economic diversification programs. Historically, oil prices have been the primary driver of market liquidity, as the Kingdom is the largest oil exporter globally, and any change in prices directly impacts state revenues, government spending levels, and consequently the profitability of listed companies. For instance, the market has witnessed a notable recovery during periods of rising oil prices, with increased spending on infrastructure, housing, and industry projects, boosting profits in sectors such as petrochemicals, construction, and services.

However, the Kingdom has recognized the importance of diversifying the economy since the mid-last decade, especially with the launch of Vision 2030, which focused on developing non-oil sectors such as tourism, entertainment, renewable energy, and technology. This has been reflected in the structure of the Saudi market, with an increase in the number of companies in sectors such as consumer services, telecommunications, and the healthcare sector. Government housing programs and mega projects (NEOM, Red Sea) have also raised demand for construction materials and cement, leading to an expanded role for companies like Hilal Cement.

With global fluctuations in oil prices and international monetary policies (such as U.S. interest rate hikes), the Saudi market has become more sensitive to global economic changes, but at the same time, it has become more resilient, thanks to sectoral diversification and increased reliance on non-oil sectors. While the oil factor remains significant, it is no longer the sole determinant of market performance, reflecting the maturity of the Saudi economy and the advancement of the financial market in absorbing changes.

The Saudi market has witnessed record levels of trading volumes and liquidity during the years 2024-2025, reflecting an increasing interest from both local and foreign investors. In 2024, the total market capitalization of listed stocks exceeded 8 trillion Saudi riyals (approximately $2 trillion), making it the largest market in the Middle East and North Africa. The average daily trading volumes rose to over 10 billion riyals per day during peak activity periods in the first half of 2025.

This growth in liquidity is attributed to several factors, including improved results from leading companies, the influx of new investments due to successful IPOs, and the activation of digital transformation programs for stock trading. Additionally, the policies of the Capital Market Authority have enhanced transparency and disclosure, increasing investor confidence and reducing risks associated with trading.

The market also saw an increase in foreign investor participation after raising the allowable ownership percentage in some companies to 10% and facilitating the opening of investment accounts. These developments supported market stability and alleviated seasonal volatility associated with international changes (such as oil prices or global interest rates).

Furthermore, the listing of new companies in the parallel market "NOMU" has attracted additional liquidity and diversified investment opportunities, leading to a significant increase in average monthly liquidity. All these indicators reflect the robustness of the Saudi market and its ability to absorb large capital flows amid a changing economic environment.

Initial public offerings (IPOs) have become a prominent feature of the Saudi market in recent years, with the market witnessing a strong wave of new listings across various sectors, from industry and services to technology and energy. These offerings are part of the Saudi government's strategy to deepen the market, support national companies, and attract local and foreign capital. In the period 2024-2025, several major companies were listed in the main market, alongside small and medium-sized companies in the parallel market "NOMU."

The NOMU market was launched in 2017 to provide a flexible platform for small and medium-sized enterprises that cannot meet the stringent listing requirements of the main market. By the end of 2024, the number of companies listed in NOMU reached dozens, with expectations of rapid growth in the coming years due to listing facilitation and government support. Among the key advantages of NOMU are: lower disclosure and financial reporting requirements, the ability to attract daring investors, and ease of transition to the main market upon meeting the conditions.

Recent IPOs have contributed to increasing market liquidity and attracting new segments of investors, in addition to diversifying the listed sectors (such as technology, health, and financial services). Market data has shown that most IPOs have seen significant demand from individual investors, enhancing the culture of stock investment.

The CMA remains committed to strict procedures to ensure transparency and integrity in IPO processes, with ongoing monitoring of companies' behavior post-listing. The experience of the IPO of Saudi Aramco has proven that the Saudi market can efficiently absorb the largest global offerings, enhancing its position as a developed exchange open to future growth.

The cement sector is a cornerstone of the Saudi economy, playing a vital role in supporting housing projects, infrastructure, and the construction of industrial and tourist cities under Vision 2030. This sector includes more than eight major companies listed in the market, with activities concentrated in specific geographic areas, giving them competitive advantages in distribution and reducing transportation costs. The annual production volume of the sector is about 60 million tons, with production capacities sometimes exceeding local demand, leading to intense competition among companies and ongoing attempts to regulate prices.

Cement selling prices are subject to government oversight through the Ministry of Housing, where a maximum price per ton is set (approximately 340-350 riyals in 2024) to ensure price stability and prevent inflation in state project costs. Cement companies face challenges such as rising input prices (fuel, electricity), seasonal demand fluctuations, and competition for large contracts with real estate developers. Conversely, massive infrastructure projects (NEOM, Red Sea, Riyadh housing) provide significant growth opportunities for the sector, with demand expected to grow by 3-5% annually until 2030.

Cement companies are striving to enhance their operational efficiency by introducing environmentally friendly technologies and developing low-carbon products, aligning with the Kingdom's environmental sustainability goals. Additionally, supportive government policies for investment in the sector help companies address production surpluses and improve profit margins. Thus, the cement sector represents a model of balance between challenges and opportunities, with sustainable growth potential driven by the transformation of the Saudi economy and increasing infrastructure projects.

Hilal Cement Company (symbol 3001) is a significant pillar in the cement industry in the Kingdom, established in 1997 and focusing its activities in the Hail region of northern Saudi Arabia. The company operates two main plants with a total production capacity exceeding 3 million tons annually, qualifying it to meet a large part of the demand in the northern regions, especially with its proximity to housing projects and government residential communities.

Hilal Cement's shares were listed on the Saudi market after partial privatization, and the company has become a model for local private sector cement production and distribution. The number of outstanding shares is approximately 100 million, with a market capitalization ranging between 3 and 3.5 billion riyals in 2024-2025, making it a medium-sized company in the sector. The company is characterized by a diverse shareholder base, including a significant proportion of Saudi individuals, alongside local institutions and investment funds.

Hilal Cement is distinguished by its strategy of focusing on the local market, with a gradual expansion of its production capacity, announcing an expected increase of 10% in production capacity during 2025. The company has also recently entered into research partnerships to develop environmentally friendly production technologies, enhancing its position in achieving sustainability goals. The company has continued to distribute good annual dividends when profits allow, enhancing its attractiveness to investors seeking stable income.

The company's geographic location near major projects in northern Saudi Arabia gives it a competitive advantage in supply and distribution, especially amid rising transportation costs between regions. These combined factors make Hilal Cement a key player in the cement sector, with balanced future growth potential within the dynamics of the Saudi market.

The financial performance of Hilal Cement has shown remarkable improvement during 2024 and 2025, driven by increased local sales and improved profit margins due to operational cost control. By the end of 2024, the share price was approximately 31.20 riyals, gradually rising to 35.50 riyals in mid-2025, reflecting on the company's total market capitalization ranging between 3.0 and 3.5 billion riyals based on the number of outstanding shares (100 million shares).

The company reported a net profit of approximately 180 million riyals in 2024, equating to about 1.80 riyals per share. The price-to-earnings (P/E) ratio was around 19.5× based on the share price, slightly higher than the sector average (15-18×), reflecting market expectations for growth in activity in northern regions of the Kingdom. The company maintained regular annual dividend distributions whenever profits allowed, distributing 1.00 riyal per share in 2022, while distributions for 2024-2025 are expected to range between 0.7 and 1 riyal per share based on the results of the general assembly.

The company's capital management policy is characterized by flexibility and a focus on directing profits towards developing factories and improving efficiency, in addition to financing expansions in production lines. It has also benefited from government support for fuel and electricity prices in reducing operational expenses. Regarding liquidity, the stock has benefited from increased local demand and the entry of foreign investors after raising the allowable ownership percentage for them. This data provides a clear picture of Hilal Cement's financial robustness, with balanced future growth potential between distributions and reinvestment in assets.

The cement sector in the Saudi market is characterized by high competitiveness, with major companies distributed across different geographic areas competing for market shares through prices, quality, and associated services. Among the prominent competitors in the sector are: Yamama Cement (3030), which has a production capacity of up to 4 million tons serving the Riyadh area; Southern Cement (3060), which specializes in covering the southern market; Eastern Cement (3050), focusing on projects in the Eastern region; and Arabian Cement (3039) in Yanbu serving the western region.

The geographic distributions of each company provide a competitive advantage in reducing transportation costs and ensuring quick access to projects. The sector faces challenges such as production surpluses at certain times, prompting companies to offer special pricing or temporarily halt some production lines to reduce excess. Additionally, intense competition drives companies to improve their products and introduce new technologies, such as producing low-carbon cement or developing materials tailored for major projects.

Companies are subject to strict government oversight to regulate prices and prevent monopolies, with the Ministry of Housing setting the maximum price per ton annually. Government policies also play a role in encouraging innovation and investment in renewable energy, providing companies that keep pace with these changes with an additional competitive advantage. In this environment, companies like Hilal Cement stand out with their focus on expanding production capacity and improving operational efficiency, enhancing their competitiveness in a dynamic and constantly changing market.

The cement sector in Saudi Arabia faces a mix of risks and opportunities that define its growth prospects and ability to achieve sustainable returns for investors. Among the main risks are: the existence of production capacities exceeding local demand at certain times, leading to pressure on prices and profit margins; fluctuations in input prices such as fuel and electricity that can negatively impact operational costs, especially if global energy prices rise or government support is adjusted.

There are also risks associated with global inflation and its impact on raw material and transportation costs, in addition to intense competition among local companies, prompting some to offer discounts or long-term deals with real estate developers to maintain market share. On the other hand, government regulations impose price monitoring and product quality standards, helping to stabilize the market but potentially reducing companies' pricing flexibility.

On the opportunity side, massive infrastructure projects under Vision 2030 represent a key driver of demand for cement, with annual growth expectations of 3-5% until 2030. Additionally, companies' focus on introducing environmentally friendly technologies and developing low-carbon products opens new markets and supports global sustainability trends. Strengthening partnerships with universities and research centers provides companies with a competitive advantage in developing innovative products. Given these factors, the cement sector remains an attractive sector for investors in the medium term, provided that risks and market variables are continuously monitored.

The Saudi market has witnessed a series of significant developments in 2024-2025 that have strengthened its position as a leading regional exchange. Among the most notable developments are: increased daily trading volumes to unprecedented rates (10 billion riyals per day at certain times), and growing participation from foreign investors after raising the maximum ownership limit to 10% in some companies. The market has also demonstrated high resilience in dealing with global fluctuations, such as changes in oil prices or international interest rates, while maintaining stability in key indicators and liquidity rates.

In the cement sector, companies have seen improvements in revenues and net profits, supported by a recovery in local sales and participation in major government projects. Hilal Cement has entered into research partnerships to develop low-carbon production technologies, reflecting the market's interest in sustainability and innovation. The company has also announced plans to increase production capacity by 10% in 2025, focusing on cost control and improving operational efficiency.

On the other hand, the government has continued to support infrastructure projects, housing, and major tourism projects, enhancing demand for construction materials and raising growth expectations for related sectors. Meanwhile, the CMA has continued its efforts to enhance transparency, monitor disclosures, and ensure investor protection, contributing to raising the market's classification within global emerging market indices. These trends confirm that the Saudi market is in a strong position to capitalize on future opportunities while monitoring risks and global economic changes.

The dynamic environment of the Saudi market requires adopting balanced and flexible investment portfolio management strategies, especially given the significant diversity of listed sectors and seasonal fluctuations resulting from local and global factors. Diversification is one of the core pillars of risk management, allowing investors to distribute their investments across different sectors (banking, industry, cement, services), reducing the impact of fluctuations in one sector on the overall portfolio.

For example, shares of cement companies may be negatively affected during periods of seasonal demand decline or increased production capacities, while defensive sectors such as banking or telecommunications may achieve stable performance. Additionally, investing in companies with regular cash distributions (such as Hilal Cement and some banks) provides a stable income source that balances capital price fluctuations. Monitoring sectoral indices helps investors identify overall market trends and select the most growing sectors at each economic stage.

Maintaining liquidity and the allocation ratio of stocks and bonds within the portfolio are vital elements for achieving the desired return goals while managing risks. Investors should also monitor periodic disclosures from companies, review annual reports, and keep an eye on any changes in government or economic policies that may impact the market. In this context, it is always advisable to consult a licensed financial advisor to develop an investment strategy that suits each investor's financial goals, considering the acceptable level of risk and investment horizon.