Capital Markets
From The Report: Saudi Arabia 2018
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Subdued oil prices deflated investor sentiment across the GCC throughout most of 2017. However, mid-2017 brought some encouraging developments: news of a possible MSCI reclassification resulted in a spike in the main index of the Saudi Stock Exchange (Tadawul) in the summer of 2017. In 2016 the government launched the National Transformation Programme 2020, with the goal of turning the economy around and taking steps towards achieving the objectives laid out in Vision 2030, the long-term national plan to become a modern, diversified economy. While the onset of the NTP improved investor sentiment by clarifying the government’s long-term objectives, in September 2017 the NTP was revised, postponing some deadlines and removing other elements from the plan altogether. These changes make future progress towards Vision 2030 less certain, which could have negative effects on investor sentiment. While this may discourage some investment in the short term, an ongoing process of reform carried out by the exchange authorities promises to attract more interest in new market instruments.

This chapter contains interviews with Mohammed El Kuwaiz, Chairman, Capital Markets Authority; Sarah Al Suhaimi, Chair, Saudi Stock Exchange; and Majed Najm, CEO, HSBC Saudi Arabia.

Articles from this Chapter

Overview

Encouraging signs: Market developments and a potential MSCI reclassification are tempering the effects of low oil prices and uncertainty
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Subdued oil prices deflated investor sentiment across the GCC throughout most of 2017. However, mid-2017 brought some encouraging developments: news of a possible MSCI reclassification resulted in a spike in the main index of the Saudi Stock Exchange (Tadawul) in the summer of 2017. In 2016 the government launched the National Transformation Programme (NTP) 2020, with the goal of turning the economy around and taking steps towards achieving the objectives laid out in Vision 2030, the long-term…

Interview

Inviting inflows: Mohammed El Kuwaiz, Chairman, Capital Market Authority (CMA), on the effects of recent deregulation measures
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Interview:Mohammed El Kuwaiz How successful has recent capital market deregulation been in attracting investment flows? MOHAMMED EL KUWAIZ: Saudi Arabia is the 23rd largest capital market in the world and the largest in the region by market cap. In spite of the market size, however, growth potential has historically been constrained by limited market access. To unlock this growth, we are deregulating the access requirements for investors, local and foreign issuers, and market participants,…

Interview

A clear path forward: Sarah Al Suhaimi, Chair, Saudi Stock Exchange (Tadawul); and CEO, NCB Capital, on the pace of capital markets reform
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Interview:Sarah Al Suhaimi What macroeconomic scenarios have the potential to impact the Tadawul’s performance in the future? SARAH AL SUHAIMI: Since 2015 lower oil prices have slowed economic growth, which was to be expected given that oil revenues play a significant role in the Kingdom’s budget. The Kingdom’s leadership responded to this challenge by committing to economic diversification with the launch of Vision 2030 and the National Transformation Programme 2020. Despite the unprecedented…

Analysis

The short of it: Introduction of short-selling on the Saudi Stock Exchange is set to add liquidity but raises questions
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Saudi Arabia’s introduction of short-selling to its stock exchange was a regionally historic moment. Despite the elevation of Qatar and the UAE to MSCI Emerging Market status in 2013, none of the exchanges in the Gulf had introduced the concept before the beginning of 2017. The issue has been on the developmental agenda of exchange authorities for years, but a number of concerns combined to delay its implementation. A desire to protect retail investors – who account for more than 70%…

Interview

Going global: Majed Najm, CEO, HSBC Saudi Arabia, on capital market reform and a growing appetite for securities
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Interview:Majed Najm Why is Saudi Arabia an attractive opportunity for local and international investors? MAJED NAJM: Saudi Arabia is not only the leading oil producer but also a G20 economy of enormous size and even greater potential. It is the biggest market in the MENA region, and half the population is under the age of 25. These dynamics lead to strong demand for consumer goods, services, housing and entertainment. Geographically, the country has a unique strategic location between Asia,…