Saudi Stock Exchange

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Saudi Stock Exchange (Tadawul)
Tadawul.jpg
Headquarters Riyadh, Saudi Arabia
Key People Chairman Fahad al-Mubarak
Products Tadawul All Share Index
Website http://www.tadawul.com.sa

The Saudi Stock Exchange (SSE), known locally by its Arabic name Tadawul, is by far the largest securities exchange in the Middle East and more than twice the size by market capitalization of second-ranked Kuwait Stock Exchange.

Background

The beginnings of the Saudi Stock Exchange (SSE) stirred in 1984 when a ministerial committee was formed to develop and regulate the country's securities market. A further evolutionary leap was made in 2003 with the formation of the SSE's new regulator, the Saudi Capital Markets Authority (CMA), and the market continued to grow rapidly until the 2007-2008 global financial crisis.

In 2007 the SSE was converted from a mutually-owned organization into a joint-stock company, the same year the exchange switched its electronic trading system to one provided by Swedish electronic exchange developer OMX, now part of the NASDAQ-OMX Group.[1]

With investment markets in the Middle East sliding in 2008 the CMA moved to shore up trading on the SSE by taking steps to encourage more foreign investment in Saudi securities markets. In August 2008 the CMA released new investment rules for non-resident foreign investors that allowed them to enter swap agreements with Saudi intermediaries, in effect allowing them a form of indirect ownership of Saudi Arabian securities for the first time, Reuters reported.[2] The SSE currently lists 160 companies, and about $2.5 billion worth of shares are traded each day.[3]

On June 15, 2015, Saudi Arabia opened its stock market to foreigners for the first time.[4] The move allows approved investors from outside the six-nation Gulf Cooperation Council to own Saudi stocks directly. It was part of an effort by King Salman to diversify the Arab world’s biggest economy away from oil.[5]

Key products

The SSE's benchmark Tadawul All Share Index (TASI) had its calculation method changed in 2007 to exclude shares owned by Saudi government entities, foreign partners, founding partners during a restriction period and those owning more than 10% of the SSE's own shares.[6] The CMA also introduced four new equities-market sectors into the TASI calculation: banking, insurance, communications and cement.

Recent performance

The SSE was the region's best-performing equities market in 2009, gaining 27.5% over the year after losing about 60% of its value over the disastrous 2008, and rising crude oil prices are expected to fuel continued upward momentum in the investment markets through 2010.[7] In mid-2009 the Saudi Stock Exchange was ranked number one in the Middle East region with a market capitalization of $287.5 billion compared to second-ranked Kuwait Stock Exchange $122.3 billion.[8]

In the first quarter of 2010 the SSE continued to grow in value, increasing its market cap to $331.22 billion by the end of January 2010 and then to $399.24 billion one month later.[9] Over the same period (January - February 2010) the Tadawul All Share Index (TASI) has risen 5.16% and over the year to the end of January 2010 the TASI has increased by just over 30%.

Key people

SSE Chairman Dr. Fahd Al-Mubarak was appointed in 2009 after being named to the exchange's board of directors in November 2007 from the SSE's pool of eligible licensed broker members.[10] Al-Mubarak has a two-decade history in the Saudi investment industry and has been closely involved with prominent Saudi privatizations such as the National Gas Industry of Saudi Arabia and Saudi Telecom.[11] He founded Saudi investment bank The Capital Group (TCG) in 2001 and subsequently became chairman of Morgan Stanley Saudi Arabia after TGC entered a joint venture with the American investment bank in January 2007.[12]

References

  1. Development Stages. Saudi Stock Exchange.
  2. Saudi unveils rules for foreign investors. Reuters.
  3. 5 things to know about the Saudi Arabia stock market. MarketWatch.
  4. Saudi Arabia Plans to Open Stock Market to Foreign Investors. The Wall Street Journal.
  5. Saudi Arabian Stocks Drop as Arab World’s Biggest Bourse Opens. Bloomberg.
  6. Tadawul All Share Index. Saudi Stock Exchange.
  7. Saudi market has best 2009 performance - most Gulf markets end year up after huge losses. Reuters.
  8. Gulf Arab stock exchanges - FACTBOX. Daily Times (Pakistan).
  9. Saudi equity market cap rises to SR1.27 trillion. Zawya.
  10. Cabinet Approves New Tadawul Board. Arab News.
  11. Dr. Fahad Abdullah Almubarak. Wharton Global Alumni Forum.
  12. Morgan Stanley Announces Joint Venture in Saudi Arabia. Morgan Stanley.