Capital Market Authority Chairman Mohammed El-Kuwait credits Vision 2030 for transforming Saudi Arabia’s stock market from 25th to 7th place globally, attracting investors and boosting entrepreneurial growth

Saudi Arabia’s stock market has witnessed remarkable growth, now ranking seventh globally, according to Mohammed bin Abdullah El-Kuwaiz, chairman of the Capital Market Authority (CMA). The Saudi stock market ranks among the top global markets, highlighting its significant transformation. Speaking at the 7th CEOs Forum organized by the Small and Medium Enterprises General Authority (Monsha’at) in Riyadh on September 30, 2024, El-Kuwaiz reflected on the market’s transformation under the Vision 2030 initiative. This economic blueprint has propelled Saudi Arabia from 25th or 26th place to a position among the top global stock markets, showcasing the resilience of the Kingdom’s real economy.

The forum, attended by over 1,200 executives from various sectors and sponsored by Saudi Commerce Minister Majid Al-Qasabi, focused on opportunities for enhancing business growth. Local and international speakers provided insights into the evolving small and medium enterprise (SME) landscape, reinforcing Saudi Arabia’s role as a hub for high-growth enterprises.

El-Kuwaiz emphasized that the Saudi stock market now mirrors the real economy more closely, playing a key role in financing entrepreneurs and attracting both local and global investors. He noted that the Saudi stock market ranks as a vital platform for investment opportunities. “Today, the stock market is not just for large corporations but also for small and medium enterprises (SMEs),” he said, noting that SMEs currently make up 55% of the listings on the Saudi market.

The Saudi parallel market, Nomu, launched in 2017, has also grown to feature over 70 companies, primarily SMEs. This growth highlights the increasing appeal of the Saudi market to businesses seeking capital for expansion or exit strategies. “We must facilitate the transition of more companies into the Kingdom, enabling them to list and issue shares,” El-Kuwaiz stated, pointing out that challenges related to zakat and taxation need to be resolved to make this process smoother.

In addition to equity financing, El-Kuwaiz pointed to the debt market as another critical avenue for growth. The CMA has proposed major amendments to simplify the regulations governing the issuance and listing of securities, aiming to increase company participation in the debt market. These changes are expected to help companies, particularly SMEs, access capital more efficiently.

El-Kuwaiz also highlighted the recent introduction of a technological system for managing subscriptions on the Saudi Stock Exchange. This innovation, which comes as the Saudi stock market ranks among the top globally, reduces costs, streamlines the process, and enhances the attractiveness of the market for both companies and investors.

The 7th CEOs Forum featured more than 60 investment meetings, further boosting opportunities for collaboration and financing in the SME sector. This investor engagement, combined with Saudi Arabia’s growing global reputation as a market leader, has cemented the country’s position as a key player in international finance.

Analysis

Political: The rise of Saudi Arabia’s stock market to the seventh largest globally is a direct reflection of the political vision behind Vision 2030, which has been instrumental in the country’s economic transformation. Under the leadership of Crown Prince Mohammed bin Salman, Saudi Arabia has moved from being an oil-dependent economy to one that actively encourages diversification. The growth of the stock market signals the success of policies that promote entrepreneurship, foreign investment, and structural reforms aimed at making the Kingdom more competitive on the global stage.

The Capital Market Authority (CMA) plays a pivotal role in translating these political ambitions into actionable reforms. By simplifying listing requirements, improving regulatory frameworks, and introducing technological innovations, the CMA has made it easier for companies, including small and medium enterprises (SMEs), to raise capital. This not only boosts the stock market’s liquidity but also strengthens Saudi Arabia’s geopolitical positioning as an emerging financial hub.

Social: The growth of the Saudi stock market also has significant social implications, particularly in fostering entrepreneurship and creating job opportunities. SMEs account for 55% of the market’s listings, and their prominence reflects Saudi Arabia’s focus on developing a vibrant private sector that can offer employment to its youthful population. With Vision 2030’s target of reducing unemployment and increasing workforce participation, especially among women and young people, the stock market’s expansion serves as a catalyst for social change.

As more companies go public and secure funding through the stock exchange, they are likely to contribute to the development of new industries and services that cater to the needs of a modernised society. This could lead to improvements in sectors such as healthcare, education, and technology, further enriching the social fabric of the country.

Economic: Economically, Saudi Arabia’s stock market ranking as the seventh largest globally underscores the success of its diversification efforts under Vision 2030. The growth of the stock market is closely tied to the overall expansion of the economy, which is becoming less reliant on oil revenues and more focused on sectors like technology, manufacturing, and tourism. The presence of major companies such as Aramco and emerging tech firms in the stock market has created one of the most profitable and diverse financial environments in the region.

The increased liquidity and participation in the market, particularly through platforms like Nomu, allow SMEs to access capital more easily, driving growth and innovation across various sectors. The proposed reforms in debt market financing and the simplification of securities regulations are expected to attract even more businesses to list on the stock exchange, contributing to Saudi Arabia’s goal of becoming a leading global investment destination.

Sustainability: The rise in Saudi Arabia’s stock market rankings reflects a broader trend of sustainability becoming a core focus of the Kingdom’s economic policies. Vision 2030 places a strong emphasis on environmental and social governance (ESG) principles, which are increasingly becoming a criterion for companies seeking investment. The CMA’s efforts to modernize the stock market by introducing technological innovations and streamlining regulations align with these sustainability goals.

The expansion of the stock market also facilitates investment in industries that promote sustainable development, such as renewable energy, clean technology, and infrastructure. By attracting foreign and local investors interested in ESG-compliant businesses, Saudi Arabia can strengthen its commitment to building a sustainable, diversified economy.