Capital market

In-depth reports on key capital market.

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    Mon, 27 March 2017

    The Saudi Parallel Market (Nomu)

    Although Saudi Arabia is the first country in the Gulf region to launch a parallel market, such markets have existed since the 1970s in many mature economies - US NASDAQ and the UK’s FTSE AIM are perhaps the best examples. That said, replicating the success of some of the more established parallel markets will not be easy. Jadwa Investment’s latest report takes a closer look at the Parallel Market and its impact on the Saudi economy.

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    Mon, 12 December 2016

    Real Estate Investment Traded Funds (REITs)

    Last month, another milestone in Saudi Arabia was achieved as the Capital Market Authority (CMA) approved a set of rules allowing the formation of Real Estate Investment Traded Funds (REITs) on the Saudi Stock Exchange (Tadawul). The introduction of REITs falls in line with the broader goals of the National Transformation Program (NTP) and Saudi Vision 2030. Besides diversifying the investment offering available within the Kingdom, REITs will also give investors much easier access to local real estate. This should bring about increased participation from the private sector which, in turn, will help stimulate the development of vacant land and raise the real estate sector’s contribution in overall GDP, a key target of the NTP.

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    Tue, 17 May 2016

    Recent CMA annoucements related to Tadawul

    A number of major developments have taken place in the Kingdom in the last few weeks underlining the government’s commitment to implementing structural economic reform. In April, we saw the unveiling of the Saudi Vision 2030 and, more recently, we saw major changes on a ministerial level. Packed in between all these announcements was an equally important but perhaps less publicized announcement by the Capital Market Authority (CMA), which will have a major impact on the Saudi Stock Exchange (Tadawul). Whilst some of these amendments focused on loosening previous rules on participation and ownership levels of qualified foreign institutional investors (QFIs), another strand of these reforms introduced new types of trading options and settlement processes, in line with international standards.

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    Wed, 06 April 2016

    The Saudi Stock Exchange (Tadawul) in 2016

    The Tadawul All Share Index (TASI) has dropped dramatically since mid-2015, making it one of the worst performing equity markets amongst major global and regional indices. Whilst the decline in oil prices has been an obvious factor in this fall, a number of other developments have played their part in dampening investor sentiment. In general, a deteriorating outlook over Chinese economic growth led to a reversal of portfolio equity flows from emerging markets. More specifically, the TASI suffered due to an escalation in regional political upheaval and energy price reform, whilst an overreaction by retail investors with short term investment horizons added to declines. Nevertheless, in recent weeks we have seen some tentative signs of recovery in the TASI. A mild improvement in oil prices and stability in global equity markets has afforded us an opportunity to be cautiously optimistic as we move forward. 

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    Mon, 29 June 2015

    Oil prices and the Saudi Stock Exchange (TADAWUL)

    With Saudi Arabia being a predominantly oil-based economy, major changes in the price of oil are likely to be followed by sentimental as well as real changes in the stock market. When a major downward movement in international oil prices occurs, this will usually be accompanied by an immediate/short-term impact on the stock market, as a result of change in sentiment. While sentimental changes often impact the stock market immediately, real changes will take effect over the longer term. If oil prices remain low, this ultimately affects economic policy framework, private sector activity and corporate profitability. The attached report examines the nature of the Tadawul All Share Index’s (TASI’s) relationship with global oil prices.

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    Thu, 18 June 2015

    Seasonality in the Saudi Stock Market - (TASI trading in and around Ramadan)

    In the next few days, Ramadan, the ninth month of the Hjiri (Islamic) calendar, will begin. Typically during this holy month, working hours are restricted, and most sectors witness subdued business activity. This year Ramadan will commence a few days after the admission of qualified foreign investors’ (QFIs) into the Saudi Stock Exchange (Tadawul). With these two events closely following each other, we thought it would be beneficial to get a better sense of the typical trading patterns observed in and around the Ramadan period, especially for the benefit of QFIs entering the market. 

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    Tue, 21 April 2015

    Update: Opening the TADAWUL up to Foreign Investors

     Last week the Capital Markets Authority (CMA) confirmed that the region’s largest, diverse and most mature capital market, the Tadawul, will be open to qualified foreign institutional investors (QFIs) by mid-2015. Currently, the Saudi stock market’s capitalization is $528bn, equivalent to two thirds of Saudi GDP, making it larger than the Mexican stock market. When compared regionally it is almost the same size as all the other equity markets in the Gulf combined. Opening up the market is likely to lead to inclusion into the MSCI emerging market index by mid-2017, with as much as $40-50 billion of total foreign inflows. Since the publication of our original report, Opening the Tawadul up to Foreign Investors, back in August 2014, we have seen a number of developments which have impacted the Tadawul All Share Index (TASI). This includes a massive drop in oil prices which negatively impacted investor sentimental and led to panic selling, and the $6 billion initial public offering (IPO) of the National Commercial Bank (NCB), which amounted to the second-biggest IPO of 2014 globally. In this update we discuss some of these recent developments in more detail. 

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    Tue, 02 September 2014

    Saudi Stock Market- August 2014

    The announcement in late July 2014 by the Council of Ministers that foreign investors would be allowed to invest directly in the Tadawul came as no surprise. The Saudi Arabian index is the region’s most diverse capital market due to its size and maturity, and has been gearing up to welcome foreign investors for some time now. Jadwa Investment views the opening up of the Tadawul as an overall positive but we believe a cautious and considered path to reform is the best way forward.

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    Sat, 06 October 2012

    Shifts in foreign investor flows and the TASI

    Big changes in foreign investment in the Saudi stock market tend to come ahead of moves in the TASI, meaning that local investors can benefit from tracking what foreign investors are doing. In six of the seven cases in which monthly net foreign investment flows have moved by over SR750 million, the TASI has moved in the same direction as this change the following month.

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    Mon, 13 August 2012

    Seasonality and the Saudi stock market

    All economies have seasonal trends, but for Saudi Arabia these trends are more pronounced than for most other global economies. In this report, we examine quarterly earnings for each of the 15 sectors of the market as well as quarterly real GDP growth rate to determine seasonal trends.

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