The Saudi Arabian stock market is currently in the spotlight as the Saudi Capital Markets Forum commences in Riyadh. The two-day event, organized by the Saudi Tadawul Group—the parent entity of the nation’s primary stock exchange—showcases a robust market with a valuation of $2.9 trillion as of January’s end.
Efforts to lure international investors to its capital markets include a series of reforms, regulatory adjustments to meet global standards, and strategic inclusion in leading international indices. The CEO of Saudi Tadawul Group, Khalid Al-Hussan, notes significant investment in technology and infrastructure, coupled with active investor engagement, as key drivers.
The kingdom’s focus on developing its capital markets is evidently yielding results, with a remarkable upsurge in IPO activity in Saudi Arabia and the UAE since late 2021. Trading volume on the Saudi exchange rocketed to over 8 billion shares in January, marking a near-quadruple increase year-over-year.
Zaid Ghoul, Head of Investment Banking at SNB Capital, expresses optimism about the market’s trajectory, citing a recent spike in share trading as a positive sign for future IPOs.
In a strategic expansion, the Saudi Tadawul announced intentions to acquire a 33% share in the Dubai Mercantile Exchange, which would enhance its influence in the global commodities market and rename the platform the Gulf Mercantile Exchange, positioning Saudi Tadawul as a leading stakeholder alongside CME Group.
On a more immediate note, major Gulf stock markets, including those in Saudi Arabia and the UAE, experienced a downturn following reports of an unexpected rise in U.S. producer prices in January. This data has heightened inflation worries and tempered expectations for prompt interest rate reductions by the Federal Reserve—a critical concern for GCC countries that peg their currencies to the U.S. dollar and align with Fed policies.