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Jeddah - Yasmine El Tohamy - RIYADH: The market capitalization of the Tadawul All Share Index surged to over $2.9 trillion in June, up from $420 million in 2015, according to a report by S&P Global Ratings.
The firm suggested that the increase indicates solid economic fundamentals and positive investor sentiment in Saudi Arabia.
Tadawul and the Capital Market Authority have launched several initiatives to expand the capital market in recent years as the Kingdom seeks to diversify its economy in line with the Vision 2030 initiative.
These included streamlining the listing process and making significant investments in market infrastructure.
These institutions approved regulations to ease foreign investors’ access to Saudi capital markets and implemented policies to improve corporate governance standards and transparency.
“Even if we were to exclude the contribution from the market capitalization of Saudi Aramco, market capitalization has almost doubled since then (2015),” said Dhruv Roy, credit analyst at S&P Global, in a statement.
Saudi stocks gained international exposure in 2019 after being added to the MSCI Emerging Markets Index, FTSE Russell, S&P Dow Jones, and other indices.
By market capitalization and trading volume, Tadawul is the biggest stock market in the Middle East and North Africa region.
The initial public offering of Saudi Arabian Oil Co. in 2019 was a significant event, and several other Saudi entities have entered the equity market since then.
S&P Global Credit Analyst Timucin Engin stated: “Given the significant economic transformation expectations and funding needs associated with Vision 2030, we expect Saudi debt market evolution to potentially outpace that seen in some other developed markets.”
“Government-related entities, major financial institutions, and key blue-chip corporates will initially lead the way,” he added.
The report, titled “Saudi Arabia’s Debt Market: Ready For Takeoff,” suggested a robust and high-quality local debt market is essential for the economy to grow and change and support the funding requirements stemming from large Vision 2030 projects.
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