Saudi Arabia’s financial wealth expected to hit $1.3tn by 2027: BCG 

LONDON: Saudi Arabia’s debt capital market is set to be redeveloped in a bid to help the Kingdom’s business acquire funding, the chairman of the Capital Markets Authority has confirmed. 

Speaking at the EFG Hermes Saudi Forum in London, Mohammed El-Kuwaiz insisted that any changes to the Saudi financial system need to occur gradually to ensure economic stability, but said the aim was to make the Kingdom as competitive on the global stage as possible. 

Reflecting on reforms already undertaken, El-Kuwaiz singled out recent changes to the Zakat laws in the asset management industry, which he argued had made the sector more attractive to foreign investors. 

The senior financial figure also spoke of his aspirations for the Saudi Stock Exchange, stating that there are around 140 firms at various stages of the initial public offering process. 

Speaking about the Kingdom’s debt market plans, El-Kuwaiz said: “We are currently in the process of completely reviewing all of our offerings, securities regulations, to make sure that it is geared toward businesses who want to finance through the debt capital market, including regulations for securitization, which have been recently passed and put in the books. 

“I think we have a lot on board that we are currently working on. I would say most of it requires a delicate balance.” 

El-Kuwaiz talked up Saudi Arabia’s plans under the Vision 2030 initiative to grow its financial sector, and ultimately see the Kingdom as one of the top 15 economies in the world. 

He said the CMA has helped ensure the asset management industry is “globally competitive,” but made clear that moving too fast with reforms could cause problems. 

“We, on the one hand, need to drive a lot of change in order to achieve the aspiration and goals that the country needs from the country’s capital market,” he said, adding: “But at the same time, stability of regulations is quite important, because if you change things quite rapidly, there’s a lead time and lag time that’s required for people to understand the regulations, and comfortable with the regulations.” 

When it came to the country's burgeoning stock market, El-Kuwaiz expressed confidence that it would continue to grow and build on its record-breaking performance in 2022, which witnessed more than 50 listings. 

 “If we project going forward, we actually still have a decent pipeline coming up, and it’s very much a reflection of having the stability, (as) having things as they are continuously attracts businesses,” he said, adding that there are 19 businesses approved to list by the CMA, with around another 50 having applied. 

“The last horizon is we periodically query the financial advisor network for the number of mandates they've signed, which gives us a further indication of the pipeline we expect, and that number is close to 70 signed mandates,” he added. 

His optimism was echoed by Mohammed Al-Rumaih, CEO of the Saudi Exchange. 

In his interview during the forum, he said: “What's beautiful, and what is even more impressive than the IPOs we did in the last year – 51 – was they represented a beautiful mosaic of companies from different industries in different sizes. And with every new IPO with a high number of subscriptions increases confidence in the Saudi market.” 

The interviews were conducted on the opening morning of the two-day forum held under the theme of “Looking for Sustainable Growth.”  

More than 375 participants were set to attend the event, with representatives from around 50 Saudi companies, as well as delegates from the Public Investment Fund.