Saudi Stock Exchange: Everything You Need to Know About Tadawul

The journey of the Saudi financial market began in the 1970s when stock transactions were limited and conducted informally between individuals and companies. With the growth of the Saudi economy and the increasing need to regulate financial operations, "Tadawul" was established in 2007 as an official unified entity representing the Saudi financial market under the supervision of the Capital Market Authority. This establishment responded to the demands for transparency and investor protection, as all separate financial markets were brought under one umbrella, and integrated systems were put in place to regulate trading, offerings, and disclosures.

Since its inception, Tadawul has adopted a sustainable development strategy, including updating technical systems, developing electronic infrastructure, and providing advanced trading services that meet international standards. Electronic trading platforms were launched allowing for real-time order execution and providing real-time data on prices and volumes, enabling individual and institutional investors to monitor markets accurately and execute their strategies effectively.

Tadawul has also introduced new financial products such as sukuk, bonds, and exchange-traded funds (ETFs), expanding the investor base by facilitating the entry of foreign investors through programs like the Qualified Foreign Investor (QFI). The Capital Market Authority has played a pivotal role in establishing regulatory frameworks and ensuring that listed companies comply with disclosure and governance rules.

Tadawul has emerged as one of the largest exchanges in the MENA region, with the total market capitalization of its stocks exceeding trillions of Saudi riyals by 2024, becoming a magnet for massive initial public offerings, the most notable being the historic IPO of Saudi Aramco. This continuous development has made the Saudi stock exchange a key platform for providing financing to Saudi companies and a primary tool in achieving the goals of Vision 2030 by supporting economic diversification and deepening capital markets.

The Saudi financial market is characterized by diversity in indices and categories that reflect the comprehensiveness of the national economy and the variety of listed companies. The main index is the All Share Index (TASI), which includes all listed stocks and is calculated based on the market capitalization of free-floating shares. The TASI index is used as a measure of overall market performance, with its movements being monitored by institutions and investment funds both locally and internationally.

In addition to TASI, the MT30 index was introduced, focusing on the largest 30 companies in terms of market capitalization and liquidity, serving as a reference for exchange-traded funds targeting leading companies. This index provides a more concentrated view of the companies with the greatest impact on the Saudi economy, such as Aramco, major banks, telecommunications companies, and leading cement companies.

Tadawul has also established a parallel market called "Nomu," targeting small and medium-sized enterprises that have not yet met the listing requirements in the main market. Nomu provides emerging companies with the opportunity to raise capital and expand their investor base, while enhancing the diversity of financial products available to investors.

All these indices and categories are overseen by the Capital Market Authority, which ensures that listed companies comply with disclosure and governance rules. Tadawul also provides periodic reports and statistical bulletins on the indices, offering researchers and investors advanced analytical tools to understand market movements. With the expansion of the investor base, especially after opening the door to qualified foreign investors, the importance of these indices as references for market trends and assessing the performance of different sectors has increased, making the Saudi stock exchange one of the most prominent reference markets in the region.

The Saudi Capital Market Authority (CMA) is responsible for the complete supervision and regulation of the Tadawul market, acting as an independent regulatory body aimed at protecting investors and ensuring the safety and stability of the financial market. The Authority establishes comprehensive regulatory frameworks that include listing rules, disclosure, and initial public offering procedures, as well as regulating the work of financial intermediaries and asset management companies.

One of the Authority's key tasks is to develop policies that enhance transparency and fairness among participants. For instance, listed companies are required to provide detailed quarterly and annual financial reports and to disclose any material events that may affect the stock price or the company's financial position. The Authority also imposes strict governance standards, including the formation of internal audit committees, effective oversight of boards of directors, and ensuring the independence of external auditors.

The Authority also plays a crucial role in supporting innovation and developing financial products, such as introducing real estate investment trusts (REITs), sukuk, and bonds, and updating technical systems to facilitate electronic trading. As the market gradually opens up to qualified foreign investors, the Authority has established precise criteria for risk assessment and ensuring that these investors comply with local market rules.

From a regulatory standpoint, the Authority has the authority to issue penalties and fines against companies or intermediaries in case of violations, and it provides mechanisms to protect investors' rights, such as committees for resolving securities disputes. This regulatory framework is one of the reasons for the high credibility of the Saudi stock exchange regionally and internationally, enhancing investor confidence and contributing to the long-term stability of the financial market. Thus, the Capital Market Authority is a cornerstone in the governance and oversight structure of Tadawul.

The Saudi financial market has witnessed significant transformations in liquidity, the number of investors, and the distribution of activity among different sectors during 2024 and 2025. Data indicates that the All Share Index (TASI) reached levels close to 11,000 points by the end of 2024, with record trading volumes, especially during the listing of major companies or executing large acquisition deals, such as the acquisition of Hail Cement by Qassim Cement.

In terms of market capitalization, the Saudi stock markets surpassed the trillion riyals threshold, reinforcing Tadawul's position as one of the largest regional exchanges. Daily liquidity increased due to the entry of international investment funds and the expansion of the individual investor base, particularly following regulatory amendments that facilitated the inclusion of qualified foreign investors (QFI). The market also saw the listing of emerging companies in the parallel market (Nomu), adding new dynamism to the rising sectors.

The energy sector emerged as one of the main drivers of activity, led by Aramco's stock, with continued demand for shares of petrochemical companies and banks. The real estate and construction sector also experienced a notable recovery due to national development projects and Vision 2030 initiatives. The cement sector benefited from the increased pace of infrastructure projects, as will be detailed later in the case study of Hail Cement.

Preliminary reports for 2025 indicate a continued relative balance in the market, despite some fluctuations related to global changes in oil prices and monetary policies. The influx of foreign investors and international institutional interest in the Saudi market continued, especially with the implementation of transparency and governance standards. These indicators confirm that the Saudi stock exchange has become a major investment destination in the region, serving as a bridge between the Saudi economy and global markets.

The Saudi financial market launched the "Nomu" platform as part of its efforts to provide a supportive environment for small and medium-sized enterprises and entrepreneurs. Nomu represents the parallel market to the main stock market, targeting companies that have not yet met the listing requirements in the main market in terms of capital, number of shareholders, or financial statements. Nomu allows these companies to raise new capital, expand their operations, and increase transparency and governance through their presence in an organized market.

One of the advantages of the parallel market is that its listing requirements are simpler and less costly than those of the main market, allowing startups to list their shares after meeting minimum requirements, such as providing financial statements for at least two years and a capital of no less than a few million riyals. Nomu also offers qualified individual and institutional investors the opportunity to participate early in the growth of promising companies, enabling them to benefit from the future growth in the value of these companies.

Through Nomu, the Capital Market Authority aims to diversify financial instruments, drive innovation, and provide new funding sources for local companies. Nomu also promotes a culture of long-term investment, as it is seen as a gateway for companies to later list on the main market after meeting regulatory requirements and achieving financial growth.

In recent years, Nomu has seen the listing of companies in diverse sectors such as technology, industry, and services, adding vitality to the Saudi financial market. Nomu exemplifies the strategic direction of Tadawul in empowering the private sector and providing suitable platforms for the development of small and medium-sized Saudi companies, positively impacting the national economy and enhancing the position of the Saudi stock exchange as an integrated system supporting various stages of company growth.

The Saudi cement sector is considered one of the essential industrial pillars in the financial market, closely linked to massive infrastructure projects, new cities, and expansions in the real estate sector. This sector includes major companies such as Qassim Cement, Saudi Cement, Yamama Cement, and Al-Jouf Cement, each covering specific geographical areas in the Kingdom. The state supports housing, transport, and energy projects, keeping local demand for cement relatively strong, especially within the framework of Vision 2030.

Competition in the sector is intense due to the abundance of factories and overlapping distribution areas, prompting companies to seek higher production efficiencies and reduce operating costs. The profitability of companies is often affected by factors such as energy prices, fuel costs, and seasonal demand fluctuations. Some companies resort to vertical integration strategies, such as owning quarries or concrete plants, to enhance the value chain and reduce reliance on external suppliers.

In recent years, the sector has witnessed mergers and acquisition deals, the most notable being Qassim Cement's acquisition of Hail Cement, which reshaped the competitive landscape and increased market concentration. Some companies have also expanded into exports to regional markets to address local production surpluses.

The Capital Market Authority emphasizes disclosure and governance standards, enhancing transparency in companies' results and financial reports. This reflects on investors' decisions who monitor indicators such as price-to-earnings ratios and dividend yields. With ongoing government development projects, the cement sector is expected to remain in the spotlight, necessitating close monitoring of regulatory and economic developments that may impact the profitability of companies listed on the Saudi stock exchange.

Hail Cement Company is a prominent example of the dynamism of the cement sector in the Saudi financial market. The company was established to meet the increasing demand for cement in the Hail region and its surroundings, and over the years of its activity, it has built a strong production base and distributed its products to significant infrastructure projects in the Kingdom. The company was listed on Tadawul under the symbol (3001 – HCC), with a market value of approximately $0.29 billion (around one billion Saudi riyals) before the acquisition deal in 2024.

Historically, Hail Cement relied on distributing a significant portion of its profits in cash to shareholders, making it a preferred choice for some investors seeking stable returns. Its stock price exhibited relative stability, with an average trading range compared to larger competitors such as Qassim Cement and Saudi Cement.

In June 2024, Qassim Cement announced its complete acquisition of Hail Cement for $378 million, in a deal executed after a series of regulatory arrangements. Hail Cement shareholders received cash compensation equivalent to the agreed market value, and the stock was delisted in August 2024. This event expanded Qassim Cement's market share and increased its production capacity.

This acquisition reflects an increasing trend towards consolidation in the sector, aimed at achieving economies of scale and enhancing the competitive position. After the acquisition, Hail Cement's stock was no longer available for trading, and its assets and results became part of Qassim Cement's consolidated financial statements. This case highlights the importance of monitoring acquisition news and new regulations in the Saudi stock exchange, as they directly impact investment opportunities and capital distribution in the market.

The Saudi cement sector includes several major companies competing for market share in various regions of the Kingdom, creating a strong competitive environment that stimulates innovation and operational efficiency. Among the most prominent of these companies:

1. Qassim Cement Company: Considered one of the largest producers in the sector, with strategically located manufacturing sites in the Qassim region. It recently acquired Hail Cement, enhancing its position as a regional leader in the cement industry.
2. Saudi Cement Company (Eastern): Holds a significant share in the Eastern and Central regions, known for the quality and diversity of its products.
3. Yamama Cement Company: Covers the Riyadh area and its surroundings, with an effective distribution network that has enabled it to achieve strong market results.
4. Al-Jouf Cement Company: Focuses on the northern regions, benefiting from geographical proximity to infrastructure projects in that area.
5. Northern Eastern Cement Company: Covers the northern eastern regions and is distinguished by high production capacities.
6. Other companies like Zulfi Cement and Najran Cement: Cover the southern and western regions and serve relatively smaller projects.

These companies rely on competitive factors such as production efficiency, quality of the final product, export capability, and distribution centers. The profitability of companies is often influenced by the level of demand for cement, which in turn is linked to the activity of the construction sector, energy prices, and major government initiatives such as Vision 2030.

Mergers and acquisition deals, such as Qassim Cement's acquisition of Hail Cement, have contributed to reducing the number of key players and enhancing market concentration, which may help improve profitability in the long term. However, regulatory challenges and changes in production costs remain influential factors in the performance of all companies in the sector, which investors closely monitor in their periodic reports on the Saudi stock exchange.

Acquisitions and mergers are among the most notable features witnessed in the Saudi financial market recently, especially in industrial sectors such as cement. These operations represent a strategic means of restructuring the market, achieving economies of scale, and increasing operational efficiency. Qassim Cement's acquisition of Hail Cement in 2024 is a clear example of this dynamic, leading to the integration of production capacities and enhancing the market share of the acquiring company.

Acquisitions directly affect stock prices and their market value. Upon the announcement of an acquisition deal, trading volumes on the target company's stock often increase, and the stock experiences price fluctuations until the completion of the deal. In the case of Hail Cement, shareholders received cash compensation, and the stock was delisted, ending the opportunity for individual investment in the company independently.

On the other hand, mergers contribute to strengthening the position of new companies in the market and open the door for additional investments in updating production lines or geographic expansion. They also enable companies to face challenges such as excess production capacity or rising operating costs. At the market level, these operations help reduce fragmentation and increase market depth, enhancing the attractiveness of the Saudi stock exchange to institutional investors.

However, acquisitions require strict adherence to the disclosure and governance rules imposed by the Capital Market Authority to ensure the protection of all parties' interests. These operations highlight the importance of monitoring regulatory news and official disclosures, as they can have significant impacts on investors' portfolios and the competitive structure in different market sectors.

Tadawul places transparency and disclosure at the core of its regulatory framework, recognizing the importance of accurate information in building investor trust and stabilizing financial markets. The Capital Market Authority requires all listed companies to provide quarterly and annual financial reports according to international accounting standards and to disclose any material events that may affect stock prices or the financial position of the company.

Events requiring disclosure include acquisition and merger deals, changes in senior management, unexpected financial results, or any regulatory issues. These disclosures are published on Tadawul's official website and reach investors through various digital channels, ensuring that information is accessible to all simultaneously and preventing manipulation or informational exploitation.

The Authority also imposes strict governance standards, including the formation of independent internal audit committees, ensuring the presence of independent external auditors, and establishing clear mechanisms for reviewing financial and administrative performance. These procedures enhance the credibility of published data and help investors make informed decisions.

Tadawul also provides periodic analytical bulletins and reports, offering researchers and investors advanced technical and statistical tools to analyze trends. Regular disclosures enable investors to monitor company results and assess indicators such as price-to-earnings ratios and dividend yields. All of this contributes to establishing the Saudi stock exchange as one of the most transparent markets in the region, enhancing its attractiveness to both local and international investors.

Gradually opening the Saudi financial market to foreign investors has been a strategic step to enhance liquidity and increase market depth. The Capital Market Authority launched the Qualified Foreign Investor (QFI) program, allowing experienced international financial institutions to enter the Saudi stock market after meeting certain criteria regarding assets and regulatory experience.

The entry of foreign investors has contributed to diversifying the ownership structure of listed companies and increasing competitiveness, as well as injecting new capital into the market. Data indicates that the share of foreigners in the market capitalization of Saudi stocks has significantly increased since the program's implementation, especially after the listing of giant companies like Aramco.

Tadawul and the Capital Market Authority have encouraged the development of infrastructure for clearing and settlement operations and provided electronic trading services that comply with the best international standards. Account opening procedures have also been simplified, and financial transfer operations have been facilitated, making investment in the Saudi stock exchange more attractive to global institutions.

Foreign investors monitor key market indicators such as TASI and MT30, focusing on leading companies with high liquidity and strong governance. They also actively participate in initial public offerings and acquisition deals, enhancing market competitiveness and providing opportunities for sustainable growth. However, the commitment of foreign investors to regulatory rules and disclosure requirements remains essential to ensure the safety and stability of the Saudi financial market.

Tadawul has invested heavily in updating its digital infrastructure in recent years, recognizing the importance of technology in enhancing trading efficiency and increasing transparency. Tadawul launched advanced electronic platforms that allow for real-time order execution and provide real-time data on prices and trading volumes, improving the experience for individual and institutional investors.

The updates included the development of clearing and settlement systems to expedite ownership transfer and reduce operational risks. Tadawul has also introduced advanced data analysis technologies, such as artificial intelligence and machine learning, to monitor trading patterns and detect potential manipulation or systemic risks early.

Tadawul has also provided smart applications that enable investors to monitor their portfolios, execute orders, and receive instant notifications about company news and market changes. The exchange has encouraged the development of digital financial transaction solutions, such as electronic wallets and secure payment platforms, facilitating broader participation from various investor segments.

These updates are part of a broader digital transformation strategy in the Kingdom, aligning with the Vision 2030 goals of building a developed digital economy. These innovations have enhanced Tadawul's ability to attract global investors and provide a safe and efficient trading environment, while also contributing to reducing operational costs and improving the quality of financial services offered in the market.

Today, the Saudi stock exchange stands before a wide range of opportunities and challenges that will define its path in the coming years. Among the most prominent opportunities is the Kingdom's investment in Vision 2030 projects, which include the development of smart cities, infrastructure, renewable energy, and tourism. These projects open the door for new companies to list in the market and create increasing demand for financing through stocks, bonds, and sukuk.

The increasing participation of foreign investors and international institutions also represents an opportunity to deepen the market and increase its liquidity, especially with the implementation of advanced transparency and governance standards. Tadawul and the Capital Market Authority seek to continue updating digital systems and developing new financial products such as exchange-traded funds, derivatives, and debt instruments, enhancing the diversity of investment options.

However, the market faces challenges related to fluctuations in oil prices, global monetary policies, and geopolitical changes that may affect capital flows. Additionally, competition with other regional markets requires Tadawul to continue innovating and providing value-added services. Regulatory challenges, such as ensuring compliance with anti-money laundering standards and protecting individual investors, remain priorities for the Authority to ensure market sustainability.

In light of these factors, the Saudi stock exchange is expected to continue playing a pivotal role in supporting economic development, while balancing the enhancement of investment opportunities with effective risk management, requiring continuous monitoring of economic and regulatory developments in both local and global markets.