tadawl: Comprehensive Overview of the Saudi Financial Market and Tadawul's Role

The Tadawul market, or the Saudi financial market (Tadawul), is the only official securities trading market in the Kingdom. The market's roots date back to 1934 when it began as an informal mechanism for trading shares of local companies, gradually evolving until it was officially established under government supervision in the early 21st century. In 2007, it transformed into a fully government-owned joint-stock company and began operating under the supervision of the Capital Market Authority (CMA), which sets regulatory frameworks and ensures compliance and transparency. The Tadawul market today includes several segments: the main market, which gathers the largest Saudi companies, and the parallel market (NOMU), targeting small and medium-sized enterprises, providing diverse investment options for investors. Additionally, Tadawul includes markets for sukuk, bonds, debt instruments, and exchange-traded funds (ETFs). The market operates on an advanced electronic system that allows for swift and efficient transaction execution, providing real-time data on prices and trades. The general index "TASI" leads market performance, while sector indices provide precise analysis of each sector's performance. The market has undergone significant updates with its inclusion in global indices such as MSCI and FTSE, enhancing its appeal to foreign investors. From a regulatory perspective, trading operations and financial disclosures are subject to strict CMA rules aimed at enhancing transparency and protecting investor rights, with advanced systems in place to monitor violations and ensure fairness. Opening the market to foreign investors is one of the largest transformations, allowing them to own shares in most listed companies up to 100% in some cases, leading to a flow of foreign capital and supporting liquidity. In summary, tadawl is not just a trading platform; it is a comprehensive infrastructure that supports the goals of Vision 2030 in diversifying the economy and attracting investments, providing investors with a safe, transparent, and technologically advanced trading environment.

The Tadawul market plays a pivotal role in the Saudi economy, not only as a platform for trading stocks and sukuk but also as a mirror of development policies and a key tool for attracting capital and stimulating growth. Within the framework of Saudi Arabia's Vision 2030, which aims to diversify income sources and transition the economy from oil dependence to a diversified knowledge-based and investment-driven economy, Tadawul has become a hub for raising the necessary financing for mega projects. The market has successfully attracted national and international companies from various sectors, strongly highlighted by the public offering of Aramco in 2019, which saw the market capitalization surge by more than 1.7 trillion riyals in one go. The general index TASI reflects macroeconomic performance, as it is influenced by the ups and downs of major companies' results, geopolitical developments, and global oil prices. On the other hand, Tadawul provides a direct channel for local companies to obtain the necessary financing for expansion, whether through initial public offerings or capital increases, without relying entirely on banks. The market also contributes to job creation through the expansion of the investor base and the growth of the financial services sector. Opening the door to foreign investment is one of the key achievements, as the percentage of foreign ownership in listed companies has gradually increased, enhancing liquidity and raising governance standards. Furthermore, the cement sector and construction materials, represented by Hail Cement, is a strategic sector supporting housing and infrastructure projects proposed by the government under housing programs and mega projects like NEOM. By leveraging technological advancements, Tadawul has become a dynamic platform that allows real-time access to market data, enhancing decision-making efficiency and attracting local and international investors. The market's importance is also reflected in its ability to absorb economic shocks through the diversification of listed sectors and the provision of various investment tools. Overall, the Tadawul market serves as a key economic lever and supports the sustainability of financial and economic growth in the Kingdom.

The Tadawul market relies on a set of indicators that measure overall market performance and the performance of its various sectors specifically. The main indicator is the Saudi financial market index (TASI), which reflects the change in prices of all companies listed in the main market. TASI is the primary benchmark for monitoring market movements and investor trends and is often used as an indicator of economic health and investment climate in the Kingdom. During 2024 and 2025, TASI often ranged above 11,000 points, reaching around 12,000 points by the end of 2025, reflecting relative stability despite global fluctuations. In addition to TASI, Tadawul provides specialized sectoral indices, such as the petrochemicals index, construction materials, banking, telecommunications, and others. These indices play an important role in analyzing the performance of each sector individually, allowing investors to assess growth opportunities and risks in each field. For example, the cement sector, which includes companies like Hail Cement, is subject to a sectoral index that monitors the performance of cement and construction materials companies, focusing on indicators such as sales volume, profit growth, and price fluctuations. Reports from 2024 indicate that the petrochemicals and basic materials sectors led trading, followed by the banking and telecommunications sectors. Meanwhile, the cement sector experienced fluctuations in profits with rising demand during certain periods, especially with the implementation of massive government projects. Sectoral indices also provide comparative analyses between companies, helping to identify the top-performing companies and those facing challenges. On the other hand, the market's inclusion in global indices such as MSCI and FTSE has contributed to increased transparency and attracted foreign capital, as global investors monitor these indices' movements to make their investment decisions. Ultimately, the main and sectoral indicators in Tadawul reflect the pulse of the Saudi economy and play a central role in guiding the decisions of investors and policymakers.

The Tadawul market operates according to an advanced electronic mechanism that enables seamless and transparent transactions, fully complying with the regulations of the Saudi Capital Market Authority. A company's journey begins at the listing stage, where the company wishing to offer its shares submits its registration and financial data to the Capital Market Authority, which reviews the company's documents and ensures transparency in disclosure and the strength of its financial position. Upon approval, the company is listed in the main market or the parallel market (NOMU), and the initial public offering (IPO) is announced. After completing the subscription phase and distributing shares to investors, the company's shares begin trading in the market through a centralized advanced electronic platform. Transactions are executed during official trading hours, where buyers and sellers meet through licensed financial brokerage firms. The market relies on a competitive pricing system based on supply and demand orders, while the digital infrastructure provides real-time information on prices and executed quantities. Settlement is conducted through the Securities Depository Center (Edaa), which ensures the secure and swift transfer of ownership and funds, typically within two business days (T+2). The Capital Market Authority monitors all operations to ensure compliance with laws and protect investor rights. The market implements mechanisms for automatic trading halts in cases of sharp fluctuations to protect the market from shocks, in addition to advanced monitoring systems to detect manipulation or trading based on insider information. Tadawul also provides access to financial data and disclosures through its official electronic platform, allowing investors to monitor company performance and assess investment opportunities. This transparent and regulated mechanism has contributed to enhancing the confidence of local and international investors and raised the market's efficiency and international credibility. In summary, the organization of the Tadawul market represents a model of good governance and technological innovation in managing regional financial markets.

The cement sector is one of the most important pillars of the Saudi economy, given its vital role in supporting infrastructure projects and urban development within Vision 2030. This sector includes more than 20 companies producing cement and construction materials, including major companies such as Yamama Cement, Eastern Province Cement, and Hail Cement. These companies occupy strategic locations across the Kingdom to meet the growing local demand. The sector has undergone significant transformations in recent years, as rising demand for construction materials has boosted productivity, supported by massive government projects such as NEOM, The Line, and Red Sea projects. Conversely, the sector has faced challenges related to rising energy costs and increased supply, leading to pressure on prices and profit margins. Data indicates that the profits of Saudi cement companies collectively exceeded 2 billion riyals in the first nine months of 2024, reflecting a relative improvement in demand despite challenges. Geographically, the sector distributes its production to cover all regions of the Kingdom, with each company holding a market share in its area and competing for government and private projects. Small and medium-sized companies face challenges in raising returns compared to larger competitors, but government support and the expansion of infrastructure projects provide the sector with opportunities for future growth. Additionally, regulatory changes and increased transparency standards have enhanced the sector's competitiveness, especially after the market's inclusion in global indices. Operationally, cement companies are striving to reduce costs by improving energy efficiency and adopting innovative technological solutions. Overall, the cement sector in the Tadawul market remains a fundamental pillar supporting economic development and reflects the dynamism of the Saudi financial market in facing local and global changes.

Hail Cement Company (HCC), listed in the Tadawul market under symbol 3001, exemplifies medium-sized industrial companies playing an important regional role in the northwest of the Kingdom. The company owns a major plant in the Hail region, covering the area's cement needs, benefiting from the geographical proximity to housing and infrastructure projects. In 2023, Hail Cement achieved a net profit of approximately 24.6 million riyals, an increase of 50% over the previous year, reflecting improvements in operational efficiency despite challenges. In the fourth quarter of 2023, the company recorded a net profit of 3.2 million riyals, while profits in the first quarter of 2024 declined to 15 million riyals, affected by rising energy costs and slowing sales. The company's share price at the end of 2025 was approximately 6.5–7.0 riyals per share, with a market value estimated between 800 million to 1 billion riyals, based on the number of issued shares and share price. The price-to-earnings (P/E) ratio ranged between 15 and 20 times, which is an average rate compared to the cement sector, reflecting moderate growth expectations for the company. The company has not announced cash dividends for 2023 and 2024, preferring to retain profits to support liquidity and finance operational activities. Management focuses on improving efficiency and reducing costs, considering strategies to update production lines and increase market share in the region. The company faces strong competition from larger firms, yet its strategic location and government support for the sector provide it with an opportunity to benefit from massive infrastructure projects. Hail Cement's performance reflects the dynamism of the construction materials sector in the Kingdom and highlights the importance of monitoring operational and financial transformations when evaluating companies listed in Tadawul.

The Saudi cement sector witnessed notable fluctuations in financial performance during 2024 and 2025 due to multiple influences, including rising energy costs and seasonal demand changes. According to recent economic reports, the profits of Saudi cement companies collectively exceeded 2 billion riyals in the first nine months of 2024, with strong quarterly profits recorded, particularly in the third quarter, where total sector profits reached approximately 648.3 million riyals. This growth was supported by increased demand for cement during the summer construction season and accelerated implementation of some government projects. However, another report indicated that sector profits in the second quarter of 2024 were about 11% below expectations, affected by rising production costs and a slowdown in some real estate projects. Results vary among companies, with larger firms benefiting from long-term contracts and greater pricing flexibility, while small and medium-sized companies were more affected by rising operating expenses. On the other hand, the relative stability of oil prices helped keep fuel costs within acceptable limits, but any future changes in government policies or energy prices could impact sector profitability. Additionally, production surplus pressured prices, with some companies resorting to price reductions to clear inventory, intensifying competition. In the medium term, the sector is expected to continue facing these challenges, with growth opportunities supported by Vision 2030 projects and increased government spending on housing and infrastructure. It is important to note that sector performance reflects a balance between supply and demand factors, highlighting the importance of regularly monitoring financial reports and major project news when assessing opportunities for companies listed in the Tadawul market.

The cement sector in the Tadawul market features a large number of companies distributed geographically to cover various regions of the Kingdom. Among the most prominent of these companies are Yamama Cement, Eastern Province Cement, Southern Region Cement, Medina Cement, Najran Cement, Arabian Cement, and Al-Jouf Cement. Major companies hold the largest shares in vital areas such as Riyadh, the Eastern Province, and the South, benefiting from their proximity to massive projects and high consumption areas. For example, Yamama Cement dominates central and eastern Riyadh, while Eastern Cement covers the industrial Eastern Province. Hail Cement serves the northwest of the Kingdom, holding a relatively limited market share compared to larger companies but benefiting from less direct competition in its area. The sector is characterized by high competitiveness due to production surplus at certain times, prompting companies to reduce prices and improve operational efficiency to maintain profitability. Major companies' strategies involve diversifying products and signing long-term contracts with government and private entities, while medium and small companies focus on enhancing local presence and reducing costs. Major government projects such as NEOM and housing initiatives play a key role in increasing demand, giving strategically located companies a competitive advantage. Conversely, some companies face challenges in promoting their products outside their traditional areas due to high transportation costs and price competition. On the other hand, the entry of foreign investors and increased transparency after the market's inclusion in global indices have raised governance standards and competition in the sector. Overall, the geographic and market share distribution in the cement sector reflects the dynamism of the Tadawul market and the importance of strategic planning for each company to enhance its market position.

Major government projects play a crucial role in stimulating demand for cement in the Kingdom of Saudi Arabia, which directly reflects on the performance of listed sector companies in the Tadawul market. Among the most prominent of these projects are the NEOM mega project in the northwest of the Kingdom, The Line project, Red Sea projects, and national housing programs. These initiatives represent an essential part of Vision 2030, which aims to transform the national economy and enhance sustainable development. These projects require vast quantities of construction materials, especially cement, which supports the growth of company sales and boosts profits. For example, economic reports indicate that the increased pace of housing and infrastructure project implementation in 2023–2024 contributed to raising cement consumption, positively reflecting on companies' results during the third quarter of 2024. Long-term supply contracts with government entities allow major companies to benefit from stable demand and prices, while medium-sized companies like Hail Cement seek to secure shares of these projects by enhancing their production capacity and developing relationships with contractors. On the other hand, changes in the pace of project implementation lead to seasonal demand fluctuations, which may put pressure on companies during downturns. Furthermore, the government imposes strict environmental standards and quality requirements for cement supply to major projects, prompting companies to invest in updating production lines and improving operational efficiency. Overall, the cement sector's connection to government projects represents an opportunity for sustainable growth and highlights the importance of monitoring national development plans and their impact on the performance of stocks listed in the Tadawul market, with a need to assess companies' ability to respond to changes in demand and achieve a balance between costs and returns.

Production costs and energy prices are among the most significant challenges affecting the profitability of cement companies in the Tadawul market. Cement production heavily relies on energy sources such as natural gas, coal, and electricity, making the sector sensitive to any changes in the prices of these inputs. Between 2021 and 2023, global energy prices experienced sharp fluctuations; however, government support for energy in Saudi Arabia helped keep costs within relatively reasonable limits. Nevertheless, an economic report indicated that the profits of the cement sector in the second quarter of 2024 were about 11% lower than expected, partly due to rising energy bills and increased transportation costs. Companies face an additional challenge in securing alternative energy sources and more efficient technologies to reduce consumption and lower environmental emissions, especially with tightening environmental regulations and the market's inclusion in global indices. Some major companies are investing in kiln heat recovery technologies and using local metallurgical coal to reduce costs, while others are considering updating production lines and improving energy control systems to enhance efficiency. Price balance presents another challenge, as production surplus sometimes exerts pressure on profit margins, particularly during seasons of declining demand. At the same time, companies strive to maintain competitive pricing to secure government and private project contracts. On the other hand, any sudden change in government support policies or rising global energy prices could negatively impact the sector. Overall, maintaining the profitability of cement companies requires effective cost management strategies, investment in modern technologies, and monitoring developments in energy policies, highlighting the importance of prudent financial management in the cement sector within the Tadawul market.

During 2024 and 2025, the Tadawul market witnessed a series of significant developments that impacted the performance of listed companies and sectors, particularly the cement sector. Among the most notable of these developments were the periodic quarterly reports reflecting profit trends and operational challenges. For example, Hail Cement announced a 19% decline in profits in the first quarter of 2024 compared to the same period last year, while the third quarter saw an improvement in sector profits as a whole, with total profits reaching 648.3 million riyals. These fluctuations reflect the impact of seasonal factors and demand changes on financial performance. The market also experienced notable trading activity, with increased trading volumes in major cement companies following the release of positive results, while smaller companies maintained relative stability in trading. In terms of corporate innovation, sector companies continued to adopt new technologies to improve efficiency and reduce costs, such as energy recycling and updating control systems. Hail Cement has not announced significant changes in its management structure recently, reflecting administrative stability that allows focusing on improving operational performance. Conversely, the Capital Market Authority and Tadawul have strengthened financial disclosure and transparency requirements, especially after the market's inclusion in global indices, raising governance and compliance standards. The government also launched tenders for new infrastructure projects that supported demand for cement and contributed to improving sector results during the second half of 2024. Overall, the developments in the Tadawul market in 2024–2025 reflect the dynamism of the Saudi market, the importance of regularly monitoring financial reports, and the role of corporate innovation in maintaining the competitiveness of listed companies.

The Tadawul market has undergone significant transformations in foreign investment policies in recent years, gradually opening the door for international investors to enter the Saudi market. Previously, there were restrictions on foreign ownership of Saudi shares, but with the implementation of the Qualified Foreign Investor (QFI) program since 2015, foreigners can now own significant stakes up to 100% in most listed companies, except for certain sensitive sectors or internal restrictions specific to each company. This has led to an increase in foreign investments and enhanced liquidity in the market, boosting trading activity and raising governance and transparency standards. In the cement sector, foreigners can invest in companies like Hail Cement, provided they meet the authority's requirements and open a trading account with a licensed brokerage firm. Market reports indicate that foreign investors typically focus on companies with stable financial performance and transparent disclosures, considering factors such as dividend distribution, price-to-earnings ratio, and opportunities arising from major government projects. Regarding challenges, foreign investors may face fluctuations in exchange rates, changes in government policies, or difficulties in assessing local risks. However, the market's inclusion in global indices such as MSCI and FTSE has facilitated the entry of foreign capital and raised the level of financial disclosure. The Saudi government encourages foreign investments as part of Vision 2030, aiming to attract more capital and localize global expertise in the financial sector. Overall, foreign investment in the Tadawul market represents an opportunity to enhance market diversity and increase its efficiency, with the importance of monitoring regulatory changes and assessing risks associated with the local market.

The Tadawul market places utmost importance on transparency and financial disclosure, considering them the cornerstone of enhancing investor confidence and protecting their rights. The Saudi Capital Market Authority imposes strict regulations requiring all listed companies to disclose their periodic financial data, profit announcements, management changes, and any material events that may affect share prices. Companies are required to publish their quarterly and annual reports through the official Tadawul platform, allowing investors to access accurate information and financial analyses instantly. The market's inclusion in global indices such as MSCI and FTSE has raised the bar for transparency requirements, as companies are now required to comply with international disclosure standards and provide detailed data on financial performance, environmental and social policies, and corporate governance. In the cement sector, transparency plays a crucial role in evaluating the performance of companies like Hail Cement, as investors rely on financial statements and disclosures to understand profit trends, distributions, and risk levels. The authority also monitors trading operations to detect any manipulation or exploitation of insider information, imposing penalties on violators to ensure market fairness. On the other hand, financial disclosure provides a robust database for analysts and investors to make investment decisions based on objective foundations. This has led to an increase in governance standards and the development of sound management practices in listed companies. Transparency and financial disclosure are essential elements in attracting local and foreign investments, enhancing the Tadawul market's ability to keep pace with global best practices, positively reflecting on market stability and sustainable growth.

The Tadawul market offers a wide range of financial instruments to meet the diverse needs of investors, from traditional stocks to sukuk, debt instruments, and exchange-traded funds (ETFs). Stocks represent the largest share of trading, with major, medium, and small companies listed in the main market and the parallel market (NOMU). These stocks allow investors to participate in the growth of companies and benefit from dividend distributions, with the possibility of real-time trading through electronic platforms. In addition to stocks, Tadawul provides an active market for sukuk and bonds, which are attractive options for investors seeking fixed returns and relatively low risks. These instruments have seen increasing demand, especially with the government and major companies issuing financing sukuk to support infrastructure and development projects. Exchange-traded funds (ETFs) have also witnessed significant growth in recent years, allowing investors to diversify their portfolios by investing in a basket of stocks or commodities within a single low-cost product. These funds offer high liquidity and pricing transparency, facilitating investors' entry and exit at any time. Other products include short-term debt instruments such as commercial papers, which companies use to finance their operational needs. All these instruments comply with the financial disclosure and transparency standards imposed by the Capital Market Authority. Overall, the Tadawul market provides a diverse investment environment that combines growth opportunities and stable returns, meeting the needs of individual and institutional investors, enhancing the attractiveness of the Saudi market regionally and internationally.