Faris AlGhannam, CEO and Board Member, HSBC Saudi Arabia: Interview
What factors position Saudi Arabia as an attractive investment destination for the global community?
FARIS ALGHANNAM: Saudi Arabia has positioned itself as one of the world’s top-10 capital markets, driven by its robust economic foundations and strategic vision. The Kingdom has made strides in attracting foreign investors, growing from virtually no such participation in the Saudi Exchange to owning more than 10% of the market and making up 20% of its liquidity.
This growth has been bolstered by Saudi Arabia’s inclusion in major emerging market indices – which has boosted its weight from around 2% in 2019 to roughly 24% today – and its visibility on the global stage. The resilience of the Kingdom’s capital markets is evident from their consistent performance and high liquidity.
How have Saudi Arabia’s capital markets reacted to recent international economic shifts?
ALGHANNAM: The Kingdom’s capital markets have shown resilience and adaptability in the face of recent global economic shifts. The stock exchange has performed consistently, underpinned by strong liquidity and investor interest. One sign of this is the growth in primary market activity, with major issuances in both the equity and debt capital markets. This trend persisted even when global markets experienced slowdowns, highlighting investor confidence in the Saudi market. Market participants are navigating these changes by aligning their strategies with Vision 2030 initiatives, focusing on sectors prioritised by the government and capitalising on greater interest from foreign investors.
In what ways can digital technologies improve the investor experience and accessibility?
ALGHANNAM: Digital technologies have enhanced the investor experience and accessibility, particularly through the adoption of remote tools. The rise of crowdfunding platforms is notable, as it facilitates the matching of investors with small and medium-sized enterprises seeking capital. These platforms have raised billions of dollars and provided opportunities for investors and businesses, helping position Saudi Arabia as a dynamic market with increasing digital integration.
Where do you see opportunities for the Kingdom to improve environmental, social and governance (ESG) reporting among listed companies?
ALGHANNAM: ESG considerations are integral to Vision 2030, with numerous initiatives aimed at promoting sustainability and corporate responsibility. The Saudi Green Initiative underscores the Kingdom’s commitment to ESG principles. Market participants are increasingly aligning their strategies with ESG goals, driven by both global trends and domestic policy.
There is growing awareness and demand for robust ESG reporting, with many corporations and investors actively seeking to enhance their ESG credentials. This focus on sustainability is reflected in significant interest from the public and private sectors in such practices.
Which strategies are being implemented within regional securities markets to enhance and encourage cross-border trading and listings?
ALGHANNAM: Under Vision 2030’s Financial Sector Development Programme, Saudi Arabia is implementing several strategies to enhance and encourage cross-border trading and listings. Initiatives by the Capital Market Authority and the Saudi Exchange have opened the market to more global investors, enabling access to a broader range of equity and fixed-income products.
The Kingdom has also facilitated cross-listing opportunities, as seen in collaboration with other GCC countries, and global stock exchanges like those in Hong Kong, Shanghai and Shenzhen. These efforts are complemented by new market segments such as futures derivatives, and securities borrowing and lending, further integrating Saudi Arabia into the global financial ecosystem, and promoting innovation and accessibility.
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