Mohammed Al Rumaih, CEO, Saudi Exchange: Interview
In what ways does Saudi Arabia’s Vision 2030 impact the development of domestic capital markets?
MOHAMMED AL RUMAIH: Vision 2030 is having a strong effect on the development of capital markets as part of the Kingdom’s broader goal to diversify its economy away from oil. Introduced in 2018, the Financial Sector Development Programme is a cornerstone of this initiative. It aims to develop advanced capital markets, enhance the competitiveness of financial institutions and create a resilient financial system. More than 700 regulatory and business reforms have been implemented to open Saudi Arabia to investment and support its objective of diversifying income sources. These efforts have demonstrated progress, as evidenced by the 4.6% growth in the non-oil economy in 2023.
To what extent do global economic uncertainties impact investor confidence and asset allocation?
AL RUMAIH: Despite international economic uncertainties, including fluctuations in oil prices and geopolitical tensions, Saudi Arabia’s capital markets have shown remarkable resilience and attractiveness. In 2023 the non-oil sector’s contribution to GDP reached a historic high, underlining the success of our diversification efforts and bolstering investor confidence. The Saudi Exchange experienced significant growth, with the Nomu – Parallel Market welcoming 35 new listings. This highlights the potential of the small and medium-sized enterprises segment. Additionally, the main board, the Tadawul All Share Index, outperformed many global benchmarks, closing the year up 14% from 2022.
By what means does the increasing focus on sustainable standards and reporting impact investor strategies and interest in local capital markets?
AL RUMAIH: The focus on environmental, social and governance (ESG) standards and reporting is reshaping investor strategies and enhancing the international appeal of Saudi Arabia’s capital markets. Since launching our ESG disclosure guidelines in 2021 there has been a significant increase in demand for ESG reporting from investors. This initiative supports sustainable growth and positions these firms to create long-term value for stakeholders. The June 2023 standardisation of ESG disclosure practices across the GCC and the upcoming Social Responsibility Index are set to further cement the Kingdom’s commitment to sustainable and responsible investing, making our market even more attractive.
How does technology reshape the trading landscape and impact efficiency for capital markets?
AL RUMAIH: Technology is significantly changing the trading landscape and improving the efficiency of our capital markets. The Saudi Exchange invests in technological advancements to enhance the market’s infrastructure, services and products. These efforts are centred around leveraging data and analytics to offer innovative products and attract investors. Our agile approach and the Kingdom’s youthful demographic are pivotal in driving these advancements. Balancing innovation with risk mitigation is crucial, and we continuously implement infrastructure enhancements to ensure stability while fostering innovation, thereby maintaining an attractive and competitive market.
What are your expectations for initial public offerings (IPOs) on the Saudi Exchange in the near term?
AL RUMAIH: In 2024-25 the Saudi Exchange anticipates a steady flow of IPOs, reflecting ongoing investor interest and a stable economic backdrop. The IPO pipeline remains strong, and recent listings – particularly those involving government-owned enterprises – have contributed to enhanced market liquidity. These developments are expected to continue supporting the growth of capital markets in the Kingdom. Consistently introducing new listings provides liquidity and helps maintain the dynamism of the market, which in turn supports the Kingdom’s broader economic objectives.
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