The Saudi stock market is poised to expand its derivatives segment with the introduction of three new members, as unveiled during the Saudi Capital Market Forum’s third iteration. Al-Rahji Capital, Alkhabeer Capital, and Aljazira Capital are set to commence brokerage services within the year, as per recent announcements.
At the same forum, the Saudi National Bank reported the successful deployment of single stock options contracts. This development is anticipated to allow both local and global investors to better hedge and manage their investment risks, while also adding to the diversity of trading products available in the marketplace.
Additionally, a collaborative report between Saudi Tadawul Group and State Street was presented at the event. Titled “Overview of Active vs. Passive Strategies in the Saudi Stock Market,” the report examines the efficacy of various stock selection strategies by mutual funds, offering valuable insights into the overall dynamics of the Saudi stock market.
The study uncovered that the market capitalization of the Saudi market has surged from SR2 trillion ($533 billion) to SR11 trillion. State Street’s Senior Investment Adviser, Ramu Thiagarajan, highlighted this during the forum, noting the shifts in market dominance across sectors, with technology and health sectors emerging as new leaders.
Thiagarajan also pointed out the increased variability in return patterns, with some firms experiencing growth of 300 to 400 percent in recent years. He observed a discrepancy in trading patterns, with non-institutional investors dominating the trading activity, whereas institutional investors maintain the majority of ownership.
He concluded by emphasizing the democratization of participation in the Saudi capital market, which has led to an evolved price discovery process over time.
The Saudi Tadawul Group hosted the two-day event under the banner “Powering Growth,” aiming to foster transformative discussions and innovation by bridging emerging and established financial markets.
Highlighting the forum’s significance, economist and policy adviser Mahmoud Khairy expressed to Arab News the importance of such gatherings in facilitating vital dialogue and collaboration, driving forward innovation within the financial sector.