Interview: Faris AlGhannam, CEO, HSBC Saudi Arabia, on expanding investor access and market opportunity
What lessons were learned from the initial public offering (IPO) activity in 2024?
FARIS ALGHANNAM: The equity market can maintain momentum even when the secondary market is mixed and global conditions are uncertain. This resilience comes from the nature of companies going public – many operate in sectors linked to national transformation programmes and large-scale development initiatives. Such IPOs give investors access to growth stories aligned with the evolving economy, and confidence in these companies’ long-term prospects drives demand, even when allocations may be limited.
At a macro level, attractive valuations, strong funding for major projects and regulatory reforms – including expanded foreign investor access – have reinforced market confidence. Continued growth in non-oil GDP shows that economic transformation is translating into real activity. Globally, IPO markets such as Hong Kong and the US have rebounded, placing Saudi Arabia within a broader recovery in new listings. With a pipeline of high-quality issuers and sustained investor confidence, primary market activity is expected to remain robust despite short-term fluctuations.
Which steps are being taken to enhance the participation of domestic institutional investors?
ALGHANNAM: Regulatory reforms are expanding investment products, encouraging professional portfolio management and developing a more sophisticated asset management industry. Large domestic institutional investors and relevant policymakers have established long-term incentives that support local investment growth. Domestic participation has risen, while global asset managers are entering the market and establishing local platforms. Pension reform is being discussed to allow individuals to invest savings in line with their objectives – following models that have created long-term capital in other markets. If implemented, this would inject additional patient capital. A larger institutional base, domestic and international, strengthens liquidity and reduces short-term volatility.
Where do you see the most significant opportunities for growth in the sukuk (Islamic bond) market?
ALGHANNAM: Saudi Arabia remains the most active local currency debt capital market regionally, yet untapped potential remains. Financing historically relied on shareholder support and bank lending, but as investment accelerates across major projects, issuers are increasingly turning to all funding channels, including sukuk and conventional bonds. Rising institutional participation is expected to drive demand across a broad range of fixed-income products and issuer profiles.
The $5bn sustainability sukuk issued in 2024 highlights the relevance of sustainability-linked financing and reinforces the country’s position in the global market, where issuance has reached roughly $170bn. International interest is growing, supported by initiatives such as the inclusion of watchlists in global emerging-market bond indices. A private credit market is expected to develop alongside the public debt market.
How is the Nomu Parallel Market facilitating access for small and medium-sized enterprises (SMEs)?
ALGHANNAM: Nomu provides SMEs with a pathway to listing and raising capital. It has attracted a strong pipeline of listings and enabled successful IPOs. Importantly, several companies have transitioned from Nomu to the main market after achieving scale and maturity, offering SMEs a viable route to public funding and giving investors early access to growth opportunities.
Nomu’s liquidity remains lower than the main market, as is typical on other exchanges globally. Regulatory enhancements are improving accessibility, and interest from both public and private investors continues to grow. With awareness expanding and further reforms expected, Nomu is set to play a significant role in channelling capital to SMEs and contributing to job creation.
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