With initial public offerings (IPOs), bond and sukuk (Islamic bond) issuances surging and further buildout by the Kingdom’s non-oil economy, Saudi Arabia’s capital markets are currently going through an expansionary period. This change is a key pillar in the Kingdom’s long-term development plan, Vision 2030, which seeks to make the country a regional and international financial centre as part of its broader economic diversification strategy. The full weight of the Kingdom is therefore now behind this drive, which will see the completion in 2026 of the 2024-26 phase of Saudi Arabia’s Capital Market Authority Strategic Plan (CMASP), driving growth.
The next phase will see capital markets open further to international investors, alongside continued regulatory and supervisory strengthening. The challenge is to sustain progress in deepening and strengthening the market amid global uncertainty and a softening oil price. Yet, as the market matures and expands, the Kingdom’s wide range of mega- and giga-projects promises sustained buoyancy in the bond and sukuk markets, as further funding of these large-scale initiatives is required. These projects also promise a longer-term transformation of the economy, to the benefit of non-oil, local enterprises.
Structure And Oversight
The Capital Markets Authority (CMA) is the key body responsible for regulation and oversight of the Kingdom’s capital markets. The CMA does this under the authority of the Capital Markets Law of 2003, which established the CMA, and that law’s subsequent amendments. Indeed, as part of the CMA’s programme of raising standards and aligning with global best practices, the law is constantly being updated in line with the CMASP and Vision 2030. The CMA regulates and develops capital markets by protecting investors, maintaining fairness, efficiency and transparency, monitoring market participants and ensuring compliance with its codes and regulations. The CMA is led by its chair, Mohammed bin Abdullah Elkuwaiz, who heads a five-member board. The CMA has direct access to the prime minister and, although it is a government organisation, is fully independent.
The Capital Markets Law also established the Saudi stock exchange, the Tadawul, as a joint stock company. This is the only entity in the Kingdom allowed to carry out securities trading. In 2021, the Tadawul was transformed into a holding company, the Saudi Tadawul Group, which has four subsidiaries: the Saudi Exchange, still known as the Tadawul, the Securities Clearing Centre Company, known as the Muqassa, the Securities Depository Centre Company, known as Edaa, and an innovation arm, known as Wamid. On 8 December 2021, the Group held a successful IPO and listed on the Saudi Exchange.
Although the origins of an informal Saudi stock market date to 1926, the Tadawul is relatively young among global exchanges. Nonetheless, it has already achieved a number of key milestones. With its market capitalisation (MCAP) increasing 463% since 2014, it is now the largest stock market in the Middle East, accounting for over 60% of the region’s equity MCAP. It is also the 9th largest stock market among the members of the World Federation of Exchanges and has MSCI Emerging Market status, accounting for around 3.3% of the MSCI EM Index. The CMA is a member of other international and regional organisations, including the International Organisation of Securities Commissions, the Union of Arab Securities Authorities and the Arab Federation of Exchanges.
Saudi Arabia’s debt issuances, meanwhile, are managed by the National Debt Management Centre and the Kingdom’s Central Bank, SAMA. They are also listed on the Tadawul’s bond and sukuk index. At the same time, sukuk are structured in accordance with the established standards set by the Accounting and Auditing Organization for Islamic Financial Institutions and the International Islamic Financial Market.
Plans And Programmes
Vision 2030 makes the expansion and deepening of the financial sector a key part of diversifying the economy away from oil and gas. Ensuring the formation of an advanced capital market is one of Vision 2030’s strategic objectives under the Financial Sector Development Programme (FSDP). Launched by the Council of Economic and Development Affairs (CEDA) in 2017, this plan brings the CMA together with SAMA and the Ministry of Finance (MoF) to achieve three pillars: enabling financial institutions to support private sector growth; developing an advanced capital market; and promoting and enabling financial planning.
The FSDP provides the umbrella for a series of specific sectoral plans, with the CMASP targeting the capital markets. Currently, the 2024-26 CMASP is being implemented, following the successful conclusion of the 2021-23 plan. Indeed, that period saw significant growth after the Covid-19 pandemic had affected markets worldwide. Comparing 2023 with 2019 – the last year before the start of the pandemic – the number of listed companies on the Tadawul grew by 52%, up from 204 to 310. At the same time, the value of the asset management industry grew 74%, from SR500bn ($133.3bn) to SR871bn ($232.2bn), and total international investments in stocks, sukuk, other debt instruments and investment funds listed on the market grew 88%, from SR259bn ($69bn) to SR480bn ($128bn).
CMASP
Within the FSDP framework, the CMASP focuses specifically on capital markets. The current CMASP is built on three pillars: activating the role of capital markets in finance and investment; enabling the capital market ecosystem; and protecting the rights of investors. Regarding the first, the total volume of financing provided by the capital market was SR964bn ($257bn) by 2023, around 79% of which came from sukuk and other debt instruments. The new plan set out to increase that, noting that Saudi Arabia was behind other economies in terms of its debt-GDP ratio. In 2022, the ratio was 18% in the Kingdom, while almost all the G7 countries had ratios above 100%. Combined with lower-than-G20-average levels of liquidity in Saudi Arabia, this presents the opportunity for a significant expansion in the local sukuk and debt market. Another key area identified as having room for expansion was asset management, with the Kingdom’s ratio of assets under management (AUM) to GDP at 24% in 2022. By comparison, the ratio at that time in Germany was 69%, while in France it was 117%. In addition, although levels of foreign investment and ownership of both equities and debt instruments have grown – the value of foreign owned stocks, for example, jumping from SR243bn ($64.8bn) to SR472bn ($125.8bn) between 2019 and 2023 – the CMA planners saw there was room for improvement.
To support these objectives, much of the 2024-26 plan focuses on regulatory changes supporting these three pillars. These range from a strengthening of protections for investors to opening up more to foreign ownership. The plan also aims to give a major boost to financial technology (fintech), which can facilitate development in all the above areas, as well as create new opportunities of its own. Open Finance initiatives are set to be enabled, along with the rollout of the robo-advisory model and the distribution model for investment funds.
In addition to continuing initiatives from the previous plan period, the 2024-26 CMASP introduces a range of reforms aimed at strengthening and modernising the capital markets. These include improvements in the listing process; the establishment of a framework for green, social and sustainable debt instruments; enhanced governance of special purpose vehicles (SPVs) and securitisation; development of the framework for closed-end real estate traded funds; greater flexibility in fund management; and a comprehensive review of the asset management framework. The plan also facilitates electronic portfolio participation, reviews restrictions on foreign investor investment, introduces licences for offshore securities businesses, and launches a major awareness and capacity-building campaign, both locally and internationally. This portfolio of reforms is also being formalised in amendments to the capital markets law itself, as well as in a range of other regulations stretching from those concerning corporate governance to disclosure mechanisms and ways of dealing with major complaints and legal cases.
Foreign Investment
Foreign participation provides a clear example of the reforms in action. Until 2015, when rules were introduced permitting qualified foreign financial institutions to invest, only Saudi companies were allowed to list on the exchange. These regulations were further amended in 2023, establishing a category of Qualified Foreign Investors (QFIs) able to invest directly in Saudi companies. However, the QFIs had to meet a high eligibility threshold of SR1.9bn ($499.9m) in assets before being able to participate. In May 2025, following amendments to the Kingdom’s main Investment Law which came into force in February 2025, the CMA began permitting foreign nationals residing in GCC states, or having resided in a GCC state and opened an investment account in Saudi Arabia, to invest in listed shares on the Tadawul Main Market.
In September 2025 the CMA followed up by proposing to lift the existing 49% cap on foreign share ownership of a listed firm. As well as likely boosting foreign investment in the Tadawul, this would also increase the weight of Saudi stocks on the MSCI Emerging Markets Index. Under MSCI rules, stocks from markets where there is an effective prohibition on majority foreign ownership are given less weight than those from more open markets. The restriction is expected to be lifted by early 2026.
In a major development, the CMA has now announced that, effective February 1, 2026, all restrictions on foreign participation in the Tadawul Main Market will be removed. The QFI framework has been eliminated, meaning that foreign investors of any size can now invest directly without meeting previous eligibility thresholds. This landmark reform is expected to attract significant additional international inflows, further integrate Saudi equities into global index trackers and provide a boost to IPO demand and market liquidity. Expanded foreign involvement is also evident in the growth of international asset management in Riyadh. In 2025, Goldman Sachs opened a dedicated asset management firm in the Saudi capital, Barclays Bank returned to the Kingdom and JP Morgan, Citi and Morgan Stanley also all increased their presence. Overall, foreign investors’ share of the Tadawul increased from around 4.0% of total MCAP in late 2024 to 4.6% in late 2025 – signalling that the above market moves have not gone unnoticed. Further amendments have also been made to the rules governing brokerages. They are no longer required to be joint stock companies, allowing for a variety of alternative structures. Flexibility has also been introduced regarding minimum capital requirements, with no specified threshold, which should increase competition and expand access to local and international players.
Market Structure
Under CEO Mohammed Al Rumaih, the Saudi Exchange had 262 listed companies and a total market capitalisation of SR9trn ($2.4trn) as of November 2025. The exchange has a main market along with a parallel market, the NOMU, a derivatives market, a sukuk/bond market, and a fund market. The Tadawul All-Share Index (TASI) is the headline index for the main market, which is subdivided into 22 industry sectors, defined according to Global Industry Classification Standards (GICS), which were adopted in 2017.
The main market also has three size-based sub-indices: the Tadawul Large Cap Index (TLCIC), Tadawul Medium Cap Index (TMCIC), and the Tadawul Small Cap Index (TSCIC). The TLCIC contributes around 70% of the total free-float capitalisation, the TMCIC 20% and the TSCIC the remaining 10%. There are two other sub-indices – the Tadawul IPO Index and the TAS150 Index. The latter consists of the largest 50 companies on the TASI according to size and liquidity, while the former measures the performance of companies that have listed within the previous five years.
The NOMU Parallel Market Index (NOMUC) is the headline index for the parallel market and divides into 17 industry groups, completing the Saudi Exchange’s suite of equities indices. There are then three fixed-income indices: the bond/sukuk market index – the headline index consisting of all the sukuk and bonds listed on the exchange; the government bonds/sukuk index; and the corporate bonds/sukuk index. Management of the indices overall falls to a number of committees, led by the Index Supervisory Committee (ISC). The Index Operation and Management Committee (IOMC) reports to this, as does the Index Oversight Committee (IOC).
To list on the main market, a minimum market capitalisation of SR4bn ($1.1bn) for at least six months before listing is required. Foreign companies can also cross-list or dual-list with another recognised exchange, although in order to cross-list, two of the board members must be permanent residents in the Kingdom, while dual listing requires a legal and board presence in Saudi Arabia. Among the 22 industry sectors featured by the TASI, the top five by MCAP as of late 2025 were: energy, which had an MCAP of SR6trn ($1.6trn); banking, with SR964.4bn ($257.1bn); materials (producers of items such as steel, cement and chemicals) with SR592.4bn ($157.9bn); telecoms, with SR272.6bn ($72.7bn); and utilities, with SR228.8bn ($61bn). Other sizeable sectors included health care equipment and services, with SR155.9bn ($41.6bn), real estate management and development, with SR133.3bn ($35.5bn), and food and beverage, with SR84bn ($22.4bn).
Key Players
In terms of leading companies, Saudi Aramco dominates the boards. As of November 2025, its market capitalisation stood at SR5.9trn ($1.3trn), accounting for approximately 66% of total MCAP and representing almost the entirety of the energy sector sub-index. Other major listed companies include Al Rahji, with 4.3% of total market capitalisation as of late 2025, mining company Maaden, with 2.6%, Saudi National Bank (SNB), with 2.5%, the Saudi Telecommunications Company (STC), with 2.4%, Saudi Basic Industries Corp. (SABIC), with 1.8%, and utility ACWA Power, with 1.6% of market capitalisation.
In the parallel market, the NOMUC recorded a total market capitalisation of SR43.2bn ($11.5bn) at the end of November 2025. The largest sector by market capitalisation was materials, with SR6.3bn ($1.7bn), followed by capital goods, at SR5.8bn ($1.5bn), real estate management and development, with SR5.5bn ($1.5bn), health care equipment and services, with SR5.1bn ($1.4bn), and consumer services, also with SR5.1bn($1.4bn). Listing on the NOMUC requires fewer disclosure and governance obligations than on the main market. Companies must have been in operation for minimum of one year and meet a minimum market capitalisation threshold of SR10m ($2.7m). Upon listing, a public float of at least 20% of total shares, or SR30m ($8m), whichever one is lower, is also a requirement. As of 2025, the largest companies listed on the NOMUC by market capitalisation included sports company Armah, with 5.9% of the index total, real estate companies Ladun and First Avenue, with 3% and 2.8% respectively, cloud services provider Edarat, with 2.7%, Nofoth food products, with 2.6%, Jamjoom Fashion, with 2.5%, and pipe manufacturer Group Five, with 2.5%. This reflects the NOMUC’s diverse range of companies.
Bonds, Sukuk, Funds & Derivatives
The Saudi Exchange’s main debt index comprised 64 bonds and sukuk as of 2025. Of those, 57 were government issuances and the remainder were corporate, with total issuance standing at SR706.4bn ($188.3bn). The debt market has evolved significantly in recent years. When the index was launched in 2020, conventional bonds accounted for 35% of the total. By 2023, however, this share had fallen to just 3%, reflecting the rapidly rising demand for sharia compliant sukuk as banks increasingly rely on these products to meet liquidity management requirements.
Since launching a sukuk issuance programme in 2017, the Saudi government has become the world’s largest sovereign sukuk issuer. The Kingdom has long issued sukuk in both Saudi riyals and US dollars. Saudi Aramco issued $6bn in corporate sukuk in 2021, the largest US dollar-denominated corporate sukuk around the world, while the Saudi government’s first US dollar sukuk followed in 2022. Saudi Arabia also entered the green sukuk market in 2020, with a $1.3bn dual-tranche issuance by the Saudi Electricity Company (SEC), signalling the Kingdom’s continued focus on sustainable finance and its commitment to expanding debt instruments to support infrastructure and environmental projects.
In the funds segment, the Saudi Exchange listed 13 exchange-traded funds (ETFs) and four closed-end funds (CEFs) as of November 2025. The wider fund market has expanded rapidly, with total assets under management exceeding SR1trn ($266.6bn) for the first time in 2024. According to Standard & Poor’s, assets under management grew at an average annual rate of 12% between 2015 and 2024, reaching $295bn by March 2025. Including both public and private funds, CMA figures show that the total number of fund subscribers rose by 47% between 2023 and 2024, to 1,742,040, highlighting a growing domestic investor base. Derivatives development is also a priority for the Saudi Exchange. In an interview with Bloomberg in December 2025, CEO Mohammed Al Rumaih said the derivatives market was set for a “major revamp” in the first half of 2026.
Performance
Saudi equity indices declined year-on-year in 2025. The TASI began the year at 12,077.31, before falling 12.8% to 10,526.09 by December 25. The NOMUC experienced a steeper correction over the same period, declining 25.6% from 31,039.53 to 23,430.93. Despite the pullback, the TASI continued to trade at higher price-to-earnings (p/e) multiples than both the MSCI Emerging Markets Index and the Dubai Financial Market Index. The decline followed several years of strong performance. After falling at the onset of the global Covid-19 pandemic, the TASI rebounded in 2020-21, with its p/e multiple reaching an all-time high of 36,805 in April 2021. The index itself continued to rise thereafter, peaking at 13,733.87 on April 28, 2022. From that point, it fluctuated within a range of approximately 10,000-13,000 points, placing its end-2025 level broadly in line with its five-year average. As of December 2025, the TASI’s p/e multiple stood at around 15, compared to a 10-year average of roughly 16. This moderation reflects a natural market correction amid broader factors.
The recent decline reflects softer global oil prices and the resulting pressure on earnings expectations. For many years, investors closely associated Saudi market performance with hydrocarbons, given the sector’s central role in the economy. However, this dependency is increasingly diminishing as the Kingdom’s non-oil economy expands rapidly under the Vision 2030 programme.
In 2024, non-oil GDP grew by 4.5%, while oil GDP contracted by 4.4%, according to the International Monetary Fund (IMF). Further underscoring this shift, despite a roughly 30% decline in global oil prices in 2025, the IMF continued to forecast real GDP growth of around 4% for Saudi Arabia, highlighting the economy’s resilience.
Initial Public Offerings
The year 2025 also saw the Saudi capital market strengthen in terms of new participants, continuing a sustained period of IPO growth. This momentum can be traced back to December 2019, when the Kingdom hosted the largest public offering in history with the listing of 1.5% of Saudi Aramco on the Tadawul, raising a record $25.6bn. On its first day of trading, the company achieved a market capitalisation of $1.9trn, making it the world’s largest listed firm.
Following this landmark transaction, IPO activity gathered pace, even during the Covid-19 pandemic. In 2020, four of the seven IPOs across the GCC took place in Saudi Arabia, with combined proceeds of $1.5bn. Activity accelerated further in 2021, when 15 of the GCC’s 20 IPOs were listed on either the TASI or the NOMU, raising around $4.65bn in total. Momentum continued in 2022, with direct listings involving 49 companies and funds. This included 16 IPOs on the main market and 13 on the NOMU, where qualified investors also subscribed to 17 stocks. Two real estate investment trusts also entered the market, along with one company undertaking a dual listing. Saudi Arabia maintained its regional lead in 2023, accounting for 35 of the GCC’s 46 IPOs. In 2024, the trend continued, with 42 of the GCC’s 53 IPOs listing on either the TASI or the NOMU overall. A clear pattern has therefore emerged of the Kingdom consistently hosting the largest number of IPOs in the region. Notably, many of these listings have involved mid- and small-capitalisation companies, in contrast to other markets in the region, where activity has often centred on a small number of large issuers. In 2025, this trajectory continued, with both the main and parallel markets recording their strongest year for listings since 2022. Around $4.5bn was raised during the year, as 40 companies entered the market. The largest transactions included low-cost airline Flynas, with a $1.1bn listing, Mecca developer Umm Al Qura, at $523.1m, and SMC Healthcare, at $500m. By the end of 2025, the exchange’s CEO, Mohammed Al Rumaih, described the IPO pipeline for 2026 as “very vibrant”, pointing to the likelihood of another strong year ahead. The strong pipeline and diversity of issuers point to a maturing ecosystem capable of supporting sustained issuance across market cycles.
Outlook
The year ahead therefore appears set to bring further deepening and broadening of the Kingdom’s capital markets. Additional IPOs, along with the market fully opening to foreign investment and ownership from February 2026, are likely to boost participation and further strengthen the Tadawul’s position as both a regional and an emerging global financial centre, supporting market growth.
At the same time, the ongoing roll-out of mega and giga projects will sustain demand for capital, with funding requirements increasingly met through bonds and sukuk as well as equity listings. For the wider economy, the gradual decoupling of Saudi Arabia’s growth trajectory from oil and gas prices is also set to continue, supporting the expansion and re-rating of non-oil equities in particular. With oil prices widely expected to face long-term structural pressure, the strategic rationale for economic diversification becomes ever more compelling.
In this context, the Saudi Exchange has a central role to play in delivering Vision 2030. Crucially, capital market development benefits from strong and sustained backing from the Kingdom’s authorities, providing a high degree of policy certainty. Market growth is also being reinforced by broader structural reforms, including measures that will see pensions and long-term savings play a larger role in capital market activity over time.
The removal of all foreign investment restrictions in the main market will further enhance the Kingdom’s appeal to international investors, inject fresh liquidity into the market and encourage more listings, particularly from larger companies seeking global exposure. As Qusai Al-Saif, CEO and Managing Director of Sadu Capital, recently told OBG, “Saudi Arabia’s next stage of growth will be driven by companies that think long term.” He added, “Our role as investors is to provide the capital, discipline and partnership that help these businesses scale sustainably.” This all bodes well for long-term market deepening and stability in the uncertain world ahead.
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