Saudi Market Center: Everything You Need to Know About the Saudi Stock Exchange

The Saudi Market Center, officially known as the Saudi Financial Market (Tadawul), is the only entity authorized to organize and facilitate the trading of securities within the Kingdom of Saudi Arabia. Established in 2007, this center serves as the main financial bridge between companies seeking to raise capital and investors looking to grow their savings. The market is overseen by the Capital Market Authority (CMA), which ensures the highest levels of transparency and governance across all listed companies.

The importance of the Saudi Market Center is reflected in its multiple economic roles. At the macro level, the market represents a fundamental platform for transforming individual and institutional savings into productive investments across diverse sectors such as banking, energy, industry, and petrochemicals. Public offerings and capital increases provide companies with flexible financing sources that support their expansion plans and development programs. In return, it offers investors the opportunity to participate in the growth of the national economy while diversifying their portfolios through the purchase of shares or various debt instruments.

From a fiscal policy perspective, the Saudi Market Center contributes to achieving the goals of Vision 2030 by enhancing financial inclusion, attracting foreign investments, and raising the level of transparency in financial transactions. The market also helps improve resource allocation efficiency, directing capital towards the most productive and profitable companies, driving all sectors towards greater competitiveness. Furthermore, the market's inclusion in global indices has enhanced its international reputation and attracted significant investment flows.

It is noteworthy that the Saudi market acts as an important tool for measuring the health of the local economy, as the movements of its indices reflect the performance of listed companies and changes in liquidity and investment. In summary, the Saudi Market Center is a vital pillar in the economic system of the Kingdom, contributing to the growth of non-oil sectors and providing a safe and efficient platform for trading and managing financial assets.

The Saudi Market Center operates under a strict regulatory and supervisory framework that ensures the integrity and fairness of financial operations. The Saudi Capital Market Authority (CMA) holds the highest regulatory role, establishing the rules and regulations governing trading, disclosure, and corporate governance. This authority aims to protect investors' rights, enhance transparency, and prevent manipulation or trading based on insider information.

The organization of the Saudi Market Center relies on several levels. At the first level is the General Authority for Financial Markets, which legislates laws, imposes penalties on violators, and monitors periodic and annual disclosures. The second level is represented by the Saudi Stock Exchange Company (Tadawul), which is the executive body managing the electronic trading platform, overseeing settlement and clearing operations, and ensuring the matching of transactions between buyers and sellers.

The regulatory system is characterized by controls on company listings, requiring specific financial criteria (such as minimum capital, profitability record, and accurate financial disclosures) to ensure the eligibility of listed entities. Governance regulations also require companies to adhere to clear policies regarding profit distribution, risk management, and related party transactions. In the event of violations, the CMA has the authority to impose fines or suspend or delist companies.

The supervisory system also includes other entities such as licensed brokerage firms, which must comply with strict licensing standards to ensure the protection of client funds and their separation from the company's assets. Regulatory authorities also require brokers to implement effective systems to monitor suspicious or unusual transactions. The role of internal audits and independent audits within listed companies serves as a supporting element for transparency and accountability.

Thanks to this integrated organizational structure, the Saudi Market Center enjoys a high degree of reliability and fairness, encouraging both local and international investors to actively participate in the market. Regulatory bodies continue to develop rules to keep pace with global practices and protect the market from systemic risks.

Since its establishment, the Saudi Market Center has undergone significant transformations, evolving from a closed local market to one of the most prominent emerging financial markets globally. These developments began with the gradual allowance for foreign investors to enter the market, with the door first opened in 2015 with a limited ownership percentage of 49%, later raised to 70% in certain leading sectors such as energy and banking.

The inclusion of the Saudi market in emerging market indices (MSCI, FTSE Russell, and S&P) in 2019 was a historic turning point. This inclusion contributed to an increase in institutional investment flows from global funds and significantly raised daily liquidity levels. For instance, the daily traded value reached between 10-15 billion SAR in 2024, with greater participation from foreign individuals and sovereign investment funds.

This openness has driven many major companies to list, such as Saudi Aramco (the world's largest oil company), National Commercial Bank, and Al Rajhi Bank, enhancing the market's position on the international investment map. Development efforts also included the launch of new financial products such as derivatives, futures contracts, and sukuk, expanding the range of tradable assets.

One of the most notable positive effects of the Saudi market's inclusion in global indices was the enhancement of transparency and disclosure, as the listing criteria for these indices required companies to adhere to higher levels of governance and financial disclosure, positively impacting investor confidence. This also led to a diversification of the investor base among individuals and institutions from around the world, contributing to a reduction in reliance solely on local liquidity.

Thanks to these developments, the Saudi Market Center has become an attractive platform for foreign capital, reflecting the strength of the Saudi economy and its future aspirations, especially amid economic transformation projects and Vision 2030.

As we enter 2024 and 2025, a set of figures and indices have emerged that reflect the dynamics and progress of the Saudi Market Center. By the end of 2024, the number of companies listed in the main market reached approximately 210, alongside about 100 additional companies in the parallel growth market. The total market capitalization of the main market exceeded 8 trillion SAR (over 2.1 trillion USD), with companies like Aramco and major banks accounting for the largest share of this value.

The general market index "TASI" serves as the primary compass for market performance. The index started 2024 at a level of 11,000 points, experiencing seasonal fluctuations influenced by factors such as oil prices, liquidity changes, and global developments. For example, the index reached 11,200 points in the summer, before declining to around 10,000 points by the end of the year, then rebounding to 10,500 points at the beginning of 2025. This movement reflects the market's resilience in facing local and global challenges.

In terms of liquidity, the average daily trading volume increased to over 2 billion shares, while the daily traded value ranged between 10 and 15 billion SAR. This was attributed to increased participation from foreign investors and international financial institutions following the rise in foreign ownership limits. The derivatives market also witnessed growth exceeding 50% in open contract volumes compared to the previous year, confirming the market's expansion into non-traditional financial products.

Sector-wise, the banking sector achieved nearly 15% growth compared to the end of 2023, driven by strong profits and encouraging regulatory policies. The petrochemical sector rose by about 10% due to improved oil prices. In contrast, the basic materials sector, including cement and metals, faced some pressures due to rising costs and weak seasonal demand. The initial public offering (IPO) market saw notable activity with offerings in banks, investment funds, and various companies, adding depth to the market and enhancing its attractiveness.

It is noteworthy that these indices not only reflect the market's size but also express the level of transparency and openness to global investments, positioning the Saudi Market Center at the forefront of emerging markets.

The Saudi Market Center encompasses a range of vital economic sectors that reflect the diversity of the national economy, offering investors multiple opportunities to diversify their investment portfolios. Each sector represents a share of the total market capitalization and influences the performance of the main market indices, such as the "TASI" index.

Among the most prominent sectors is "banking and financial services", which typically constitutes between 20-25% of the total market capitalization, including leading names such as Al Rajhi Bank and National Commercial Bank. Following this is the "energy and petrochemicals" sector, where Saudi Aramco plays a pivotal role, accounting for nearly 40% of the market capitalization on its own. This sector also includes companies like SABIC and SABIC Agricultural Nutrients, making it one of the most sensitive sectors to global oil prices.

The "basic materials" sector, which includes cement and metals companies, is considered a cornerstone of infrastructure, covering the needs of large construction and building projects. Emerging sectors include "telecommunications", led by companies like STC and Mobily, which have benefited from digital expansion and the shift towards a digital economy.

There are also sectors like "retail and consumption", which include companies such as Almarai and Panda, and the "industry and manufacturing" sector, which is expanding with the listing of new companies in technology and renewable energy. The market also offers opportunities in logistics, insurance, healthcare, tourism, and education sectors, reflecting the diversity of the Saudi economy.

The importance of sectoral weight distribution lies in its ability to achieve a form of balance; when the performance of a particular sector declines due to external or local conditions, another sector may compensate for this decline. This diversity also allows investors to manage risks more effectively and choose sectors that align with their investment goals or future economic trends.

Thanks to this diversity, the Saudi Market Center has become a model for emerging economies striving to achieve a balance between sectoral growth and long-term stability.

Trading operations in the Saudi Market Center are conducted through a central electronic platform managed by Tadawul, characterized by transparency and speed in order execution. Trading sessions run from Sunday to Thursday, from 9:30 AM to 3:00 PM, with a preparatory session before the opening and a closing session after the market closes. Investors can issue buy and sell orders through licensed brokerage firms, where orders are matched according to their type (market price or specified price) and executed as soon as a counterparty is available.

Listing in the market is subject to a set of strict requirements, including providing a minimum capital, a profitability record for several years, and periodic financial disclosures certified by independent auditors. These conditions aim to ensure the quality of listed companies and protect investors from risks associated with unqualified companies. Governance and disclosure standards are also applied, requiring companies to adhere to clear policies regarding profit distribution, risk management, and disclosure of related party transactions.

The market consists of two main segments: the main market, which includes large and medium-sized companies in full compliance, and the parallel growth market, which is dedicated to small and medium-sized enterprises with more flexible listing conditions. This classification encourages startups to join the market, giving them the opportunity to grow and expand before transitioning to the main market.

Settlement and clearing operations in the Saudi market follow advanced systems to ensure transaction security, with ownership transferred immediately upon completion of the transaction. Systems have also been implemented to halt trading immediately in cases of sharp price fluctuations, protecting investors from unreasonable price slippages.

This regulatory mechanism reflects the Saudi Market Center's commitment to providing a fair and transparent trading environment, ensuring market efficiency and encouraging companies and investors to actively participate.

The Saudi Market Center is no longer limited to traditional stock trading; it has expanded to include a wide range of advanced financial instruments that meet the diverse needs of investors. Among these instruments are sukuk and bonds, futures contracts, financial derivatives, and exchange-traded funds (ETFs).

The derivatives market in Saudi Arabia was officially launched in 2020 and has experienced rapid growth, exceeding 50% in open contract volumes during 2024 compared to the previous year. This market allows investors to trade futures contracts on stocks and index funds, providing effective means for hedging against price fluctuations and managing risks. Derivatives can also be used to implement complex investment strategies such as short selling or margin trading.

The sukuk and bond market provides investors with fixed or variable income debt instruments, some of which comply with Islamic law. This market has seen significant growth in recent years, with an increase in government and corporate issuances, offering investors opportunities to diversify income and distribute risks.

On the other hand, exchange-traded funds (ETFs) provide an easy option for investing in a basket of stocks or financial assets, allowing small and medium investors to diversify their portfolios without the need to purchase each stock individually. New instruments such as global depositary receipts have also been introduced, reflecting ownership of shares in major international companies (such as Apple and Tesla) within the Saudi market through mechanisms approved by the central bank.

This diversity of financial instruments reflects the evolution of the Saudi market and its responsiveness to the needs of both local and international investors, providing opportunities for growth and hedging in a more professional and competitive investment environment.

The cement sector is an essential part of the structure of the Saudi Market Center and is classified under the "basic materials" sector, which also includes companies in metals and chemicals. The importance of this sector lies in its direct connection to infrastructure projects and urban development, which form a cornerstone of the Kingdom's Vision 2030 aimed at diversifying national income sources.

The Kingdom boasts the second-largest cement production sector in the world after China, attributed to the continuous boom in government and private projects, such as city expansions, major transportation projects, port development, and the construction of residential and commercial complexes. Market demand for cement heavily depends on the pace of government and private sector spending on these projects. During economic recovery periods, demand rises significantly, boosting the profits of cement companies and increasing trading activity on their shares.

The cement sector also faces challenges regarding operational costs, as it is one of the most energy-intensive sectors (gas and electricity), making it sensitive to fluctuations in energy prices and new environmental regulations. These challenges have prompted many companies to adopt technological solutions to improve production efficiency and reduce costs, such as using alternative fuels (agricultural and industrial waste) or investing in renewable energy.

Competitively, the Saudi market includes major companies such as Yamama Cement, Qassim Cement, Riyadh Cement, and Southern Cement, alongside medium and small regional companies like Hail Cement Company. These companies compete for market share based on product quality, prices, production capacities, and logistics networks. Government support, tax exemptions, and incentives for investment in environmentally friendly technologies play a role in enhancing the sector's competitiveness.

Thanks to these factors, the cement sector remains a vital component of the Saudi Market Center, reflecting the health of the national economy and its ability to continue growing and expanding in strategic projects.

Hail Cement Company exemplifies medium-sized regional companies in the Saudi cement sector. Established in 2017 after the restructuring of the cement sector to meet governance and disclosure standards, the company focuses on producing gray and natural cement in the Hail region in the northwest of the Kingdom. The company operates advanced factories and local quarries that support its logistics network to reach urban cities.

Financially, the price of Hail Cement's stock during 2024 ranged between 20 and 30 SAR per share, a level considered relatively low compared to larger companies in the sector. The market capitalization was estimated at around 500 million SAR, placing the company in the small-cap category in the main market. The net profit for 2023 was approximately 24.6 million SAR, while the first quarter of 2024 recorded net profits of 15 million SAR, reflecting a decline of about 19% compared to the same period last year.

The company's price-to-earnings (P/E) ratio typically ranges between 15 and 25, reflecting profit volatility relative to market capitalization. Regarding cash distributions, the company tends to distribute a modest percentage of its net profits, with an average distribution yield between 3% and 6% of the stock value in recent years. This is due to the company's policy of retaining part of the capital for reinvestment and expanding production lines.

The performance of Hail Cement's stock experienced fluctuations in the second half of 2024, influenced by earnings announcements and seasonal demand changes for cement. Despite lower daily liquidity compared to leading companies, the stock remains of interest to investors focused on the cement sector or seeking sectoral diversification. The company's success in improving production efficiency and reducing costs will be a critical factor in supporting future profit growth and stock value.

The Saudi cement sector is among the most competitive sectors in the Saudi Market Center, with market share distributed among a group of major and regional companies. Among the main competitors of Hail Cement are Yamama Cement (symbol 3002), Qassim Cement (3011), Riyadh Cement (3000), Southern Cement (3340), and Najran Cement (3310), along with other companies serving specific geographic areas.

Yamama Cement and Qassim Cement are among the largest companies in the Kingdom, with production capacities exceeding 10 million tons annually, while Hail Cement has medium production capacities concentrated in the north and west of the Kingdom. Companies compete based on prices, product quality, distribution efficiency, and geographic proximity to demand areas. The government often seeks to regulate prices to prevent real estate inflation and maintain market balance.

The strategies of major companies differ from those of medium-sized companies like Hail, as large companies invest in modern production lines, renewable energy projects, and expanding distribution networks to cover the entire Kingdom and export abroad. Medium-sized companies benefit from geographic focus and serving regional projects but face challenges in achieving economies of scale.

Other influencing factors include fluctuations in energy and raw material prices, which directly affect profit margins. The evolution of environmental regulations and rising compliance costs also push companies toward adopting new technological solutions. In recent years, trends toward alliances or mergers among some companies have emerged to enhance efficiency and reduce harmful competition, which may affect market share distribution in the future.

Overall, Hail Cement remains an important regional player, but it faces strong competition from companies with higher production and marketing capabilities. The ability to innovate and reduce costs will be crucial factors in maintaining market share and improving financial performance.

The cement industry in Saudi Arabia is witnessing several strategic challenges and opportunities in recent years. Among the most prominent challenges is the continued rise in energy costs, especially following increases in gas and electricity prices, which erode profit margins, particularly for small and medium companies like Hail Cement. Additionally, new environmental regulations require companies to invest in emission reduction technologies, necessitating additional capital expenditures.

There are also competitive pressures due to oversupply in certain seasons and weak seasonal demand following the completion of major government projects or periods of economic downturn. The market is also experiencing price fluctuations influenced by global factors such as oil prices and construction activity in the region. All of this necessitates companies to regularly review their strategies to align with market fluctuations.

On the other hand, promising opportunities arise with the continued implementation of massive infrastructure projects such as NEOM, the Red Sea project, and port expansions. These projects require vast quantities of cement, supporting demand growth for local companies. Additionally, the shift towards a non-oil economy and increased government investments in tourism and technology sectors open new markets for cement companies.

Other opportunities include the potential for exports to neighboring markets when achieving cost savings, especially with government support for companies investing in renewable energy or environmentally friendly technologies. The trend toward mergers or alliances among small and medium companies may also enhance their competitiveness and reduce operational costs.

The ability to innovate and improve production efficiency remains pivotal for achieving sustainability and growth in the Saudi cement sector, especially amid intense competition and global economic changes.

During 2024 and 2025, the Saudi Market Center has witnessed a series of regulatory and technological developments reflecting the trend towards enhancing transparency and attracting international investments. Among the most significant developments was the increase in the maximum foreign ownership percentage in some leading companies, such as Aramco, to 70%, aimed at increasing the flow of foreign capital and expanding the shareholder base.

On the regulatory front, the Capital Market Authority continued to update the rules governing disclosure and corporate governance, focusing on environmental and social disclosures (ESG) as a prerequisite for listing and remaining in the main market. New mechanisms for immediate settlement and clearing have also been introduced, along with technologies to monitor suspicious or unusual trading activities, enhancing the market's credibility and the security of operations.

Technologically, the Tadawul platform has undergone frequent updates to improve user experience and speed up order execution. New financial products such as global depositary receipts have been launched, allowing local investors access to shares of major foreign companies. The digital infrastructure of the market has also been enhanced, including the adoption of artificial intelligence technologies in financial data analysis and monitoring systemic risks.

In the cement sector, trends towards using renewable energy and reducing carbon emissions have emerged, supported by government programs offering tax exemptions or energy support for companies investing in environmentally friendly technologies. Some companies are seeking to adopt these solutions to keep pace with global regulations and attract investors interested in sustainability.

These developments reflect the Saudi Market Center's commitment to keeping pace with global best practices and enhancing its attractiveness as a regional and international financial hub, while providing a safe and transparent investment environment.

The Saudi Market Center and the cement sector have witnessed a series of impactful news and developments during 2024 and 2025 that affect the performance of companies and the market as a whole. Among the most notable events was Hail Cement Company's announcement of a 19% decline in net profit in the first quarter of 2024, reaching 15 million SAR, compared to the same period last year, due to increased operating costs and weak seasonal demand. This decline temporarily reflected on the stock price in the market, which saw a noticeable drop during the earnings announcement session.

The market also experienced significant activity in initial public offerings (IPOs), with shares being offered in banks and investment funds, adding depth to the market and increasing the diversity of listed companies. Regarding reforms, the decision to raise the foreign ownership percentage to 70% in some companies came into effect at the beginning of 2024, encouraging the flow of more foreign investments, especially in leading companies.

In terms of financial product development, the listing of depositary receipts for shares of major foreign companies, such as Apple and Tesla, within the Saudi market has been allowed, enhancing market depth and providing local investors with new diversification opportunities. The government also announced massive infrastructure projects in various regions, which are expected to increase cement demand in the coming years.

There have also been trends toward mergers and alliances among small and medium companies in the cement sector, aimed at reducing unhealthy competition and improving operational efficiency. Additionally, interest in environmental technologies, such as using solar energy or biomass in production lines, has emerged.

All these news items confirm the vitality and change in the Saudi market, highlighting the challenges and opportunities available to companies and investors amid the evolving regulatory and economic environment.

The Saudi Market Center plays a pivotal role in supporting the achievement of the goals of Vision 2030, which aims to diversify national income sources and reduce dependence on oil. By providing a transparent and efficient platform for raising capital, the market contributes to financing infrastructure projects, renewable energy, technology, and tourism, enhancing the growth of non-oil sectors.

One of the main objectives of the vision is to increase the financial sector's contribution to GDP and expand financing channels for small and medium enterprises. The Saudi Market Center has responded to this vision by launching the parallel growth market, which allows startups to access new funding sources under more flexible listing conditions. The opening up to foreign investments has also brought in capital and global expertise that support innovation and development.

In terms of governance and transparency, the market has imposed strict disclosure standards and advanced governance requirements, contributing to raising the level of trust among local and international investors. The market's inclusion in global indices has also enhanced Saudi Arabia's position as a regional and international financial hub.

By supporting massive infrastructure projects and digital transformation programs, the market provides diverse investment opportunities for individuals and institutions, contributing to job creation and enhancing economic competitiveness. Additionally, the developed financial sector encourages saving and investment, positively impacting financial and social stability.

Through these roles, the Saudi Market Center is an integral part of the Kingdom's strategy to achieve sustainable development and transition to a diversified economy capable of facing future challenges.

The Saudi Market Center is viewed as one of the main drivers of sustainable economic growth in the Kingdom, especially with ongoing economic reforms and the activation of Vision 2030 programs. The market is expected to witness further expansion in the number of listed companies, focusing on new sectors such as technology, renewable energy, and advanced industries.

Recent regulatory developments, such as raising foreign ownership limits and developing the derivatives market, indicate the market's commitment to keeping pace with global best practices and providing diverse investment tools. The introduction of new financial products, such as depositary receipts and exchange-traded funds, enhances market depth and attracts a broader range of local and international investors.

On the infrastructure front, Tadawul and the Capital Market Authority continue to update digital platforms and adopt artificial intelligence technologies for data analysis and risk monitoring. This is expected to improve operational efficiency and increase order execution speed, enhancing market attractiveness.

In the cement sector, companies are expected to benefit from increased government spending on infrastructure projects, with a need to focus on innovation and cost reduction to address environmental and competitive challenges. The trend toward alliances and mergers may also reshape the sector's landscape and provide opportunities for joint growth.

Thanks to these trends, the Saudi Market Center remains at the forefront of emerging markets, with aspirations for further development and integration into the global economy. However, it remains essential to continue developing regulatory frameworks and enhancing transparency to ensure sustainable growth and attract more investments.