Staggering 476% Increase in Saudi Arabian Financial Market Value Over the Last 5 Years: A Look at the Role of the Capital Market Authority

The Saudi Capital Markets Authority reported that the market value of the financial market in the Kingdom has increased by 476% over the past 5 years.

Yazid bin Saleh Al Damiji, Deputy Minister of the Capital Market Authority for Strategic and International Affairs, confirmed that the holding of a financial sector conference in the Kingdom, which is one of the most important dialogue platforms attracting decision makers in the sector and high-ranking heads of financial institutions – reflects the importance of Saudi Arabia’s financial market, which is the largest market in the region. By the end of 2022, it ranked ninth among the largest stock exchanges in the world by market capitalization and reached fourth place among the G20 countries by the end of the year.

Al-Damiji noted that Saudi Arabia’s financial market has seen growth on many levels in recent years as the number of companies listed on the market increased from 188 companies at the end of 2017 to 269 companies listed at the end of 2017. last year in 2022, according to the Al-Eqtisadiah newspaper.

Al-Ektisadiya said the market saw a huge increase in market value, amounting to 9.9 trillion Saudi Riyals (or the equivalent of $2.6 trillion) by the end of 2022, up 476.5% from the past five years.

Al-Dumaji stated that the Authority has sought to develop the Saudi Arabian financial market in various areas related to the operation of the market and improve the working mechanism and rules that have contributed to the development of productivity at the level of companies and sectors, and this has resulted in an increase in the number of initial public offerings and direct main and parallel market listings in the final year of 2022. Achieve 56, up from 34 in 2021, attributing that there are still around 80 initial public offering requests. transactions pending approval from the Capital Markets Authority, indicating an increase in demand and a trend in the private sector to take advantage and take advantage of the financial market as an alternative funding channel.

Deputy Minister of Capital Markets Administration for Strategic and International Affairs touched upon the Sukuk and Debt market, saying that the total amount of funds raised from the issuance of Sukuk and Debt instruments rose from 37.2 billion Saudi Riyals in 2021 to 53.9 billion Saudi Riyals . in 2022, an increase of 44.9%, indicating that the boom and dynamics in the financial market led to total assets under management reaching 743.4 billion Saudi Riyals by the end of 2022, up 90.1% more than in the last five years, reached 391 billion Saudi Riyals in 2017.

Yazid bin Saleh Al Damiji stated that the developments observed in the financial market in Saudi Arabia have had a positive impact on market institutions as their number has increased significantly and reached 141 institutions, which is 63% more than their number, which reached 86 institutions in the end of 2017, and the revenues of these institutions increased by 144.% and reached 12.2 billion Saudi Riyals by the end of 2022 compared to its level in 2017.

Regarding foreign investors, Al-Damiji commented, “The main market saw an increase in foreign investment reaching a historic high of up to 388% as it increased from 71 billion SAR in 2017 to 347 billion SAR by the end of 2022. and the value of foreign investor ownership continued to rise, reaching 14.2% of free float on the main market at the end of last year 2022, compared to 12.8% at the end of 2020,” adding: “Furthermore, since joining the global market indexes, net foreign investment by the end of 2022 was about 183.9 billion SAR, thus recording the highest net domestic flows, estimated at 43 billion SAR, in 2022 alone.

He noted that the agency is constantly working to develop “regulations governing foreign investment in securities” in order to increase the attractiveness and efficiency of the Saudi Arabian financial market in the eyes of foreign investors, as well as increase the competitiveness of the market at the regional and international levels. levels that support the local economy by attracting new foreign capital. The focus on the financial technology (fintech) sector is one of the main developments that characterize the growing level of maturity of the Saudi Arabian financial market, which is an important step to compete with other financial markets.

And he pointed out that by the end of 2022, the number of fintech permits in the Kingdom reached 29, which is 262.5% more than the total number allowed in 2020, indicating that the Capital Market Authority is committed to further development. in the field of financial technology, especially in relation to encrypted securities, and that the authority recently announced that it has received financial technology business models related to encrypted securities in the fourth quarter of 2022, and has already received 3 applications for it.

And he continued: “The authorities, in order to provide coding, will continue to conduct research to determine the approach to the implementation of various crypto assets in the financial market in order to study the risks associated with this and use the opportunities that it provides. determine the optimal direction of regulation of such activities, taking into account the development of dealing mechanisms and record keeping and data”. among dealers in the financial market in a reliable technical way.

Source: The Economist.

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