Saudi Capital Markets: Driving Vision 2030 Diversification Goals
Saudi Arabia’s capital market growth is pivotal for achieving the “Vision 2030” diversification agenda. Standard & Poor’s anticipates the emergence of the local currency debt market and foreign currency issuance will fuel significant expansion. The Kingdom aims to reduce oil dependency, with “Vision 2030” emphasizing financial industry growth, attracting foreign investment for vital projects.
A recent S&P report, “Saudi Arabia’s Loan Market: Ready for Take Off,” highlights the need for a robust domestic loan market to finance transformative projects. Major financial institutions and corporations are expected to lead, with lower-credit entities following suit.
Initiatives by the Capital Market Authority (CMA) and Tadawul focus on accelerating listings, enhancing infrastructure, facilitating foreign access, implementing governance practices, and boosting transparency. Inclusion in global indices, such as MSCI Emerging Markets, has enhanced Saudi stocks’ international standing.
Post-Saudi Aramco’s historic IPO in 2019, Tadawul’s market capitalization surged from USD 420 billion (2015) to over USD 2.9 trillion (June 15, 2023). Recognizing the banking sector’s limitations, the report underscores the role of businesses expanding debt-based borrowing to restore financial equilibrium and grow the internal capital market.
The CMA’s initiatives, including non-resident foreign investment in debt instruments, signify efforts to strengthen the debt market. The FTSE Emerging Markets Government Bond Index will feature Saudi sukuk in 2022. Initiatives promoting the local currency market expect top businesses to lead, fostering financial growth aligning with “Vision 2030.”