The Capital Market Authority’s (CMA’s) Strategy & International Affairs Deputy, Yazeed Bin Saleh Aldemaigi announced that the hosting of the Kingdom to the Financial Sector Conference (FSC), which serves as a unique platform for dialogue that attracts financial industry decision-makers and senior executives in the capital institutions, reflects the importance of the Saudi capital market, which ranked 9th globally in terms of market capitalization at the end of 2022, and ranked 4th among G20 countries at the end of 2022.
Aldemaigi reported that Saudi capital market witnessed sharp growth within last years in different aspects. By the end of 2022, the number of listed companies on the Saudi Stock Exchange had increased to 269, compared to 188 at the end of 2017. In line with increase of listed companies, the market witnessed a huge increase in market capitalization, reaching SAR 9.9 trillion ($2.6 trillion) by the end of 2022 a 476.5% increase over the last 5 years.
CMA aimed to develop the Saudi capital market in various fields relevant to the market business, work mechanism improvement, and regulations that contributed to develop performance on the level of companies and sectors. The above resulted in increasing the number of initial public offerings (IPOs) and direct listings in the main and parallel markets to 56 IPOs and direct listings in 2022, compared to only 34 IPOs in 2021, Aldemaigi added.
The Deputy stressed that around 80 requests are waiting CMA approval for IPOs, which indicate the demand from the private sector to get benefit from the capital market as an alternative channel of funding.
As for the Sukuk and debt instrument market, Aldemaigi stated that the total amounts collected from offerings of sukuk and debt instruments increased from SAR 37.2 billion in 2021 to SAR 53.9 billion in 2022, marking a 44.9% increase.
The positive momentum in the market has resulted in total assets under management of SAR 743.4 billion by the end of 2022, compared to SAR 391 billion at the end of 2017, marking a 90.1% increase over the last 5 years, Aldemaigi stated.
Development of Capital Market Positively Reflected on Market Institutions and Foreign Investment
CMA’s Strategy & International Affairs Deputy pointed that all these improvements seen in the capital market were positively reflected into the market institutions, which the number of market institutions witnessed huge increase of 141 institutions, compared to 86 institutions at the end of 2017 raising by 63%. Also, the market institutions revenues jumped by 144%, to reach SAR 12.2 billion at the end of 2022, compared to its level in 2017.
As for foreign investors, Aldemaigi reported that the main market witnessed a rise in foreign investments, reaching historically unprecedented levels, which increased by 388% from SAR 71 billion in 2017 to SAR 347 billion at the end of 2022. The ownership value of foreign investors continued its upward trend, reaching constituting 14.2% of the free float shares in the main market by the end of 2022, compared to 12.8% at the end of 2020.
Since the inclusion to the global indices, the net foreign investment at the end of 2022 amounted to about SAR 183.9 billion, which marked the highest net inflow, estimated at SAR 43 billion only in 2022. For increasing the attractiveness and efficiency of the capital market to the foreign investor, enhancing its regional and international competitiveness, and supporting the local economy by attracting new foreign capitals, CMA is working for developing the “Rules for Foreign Investment in Securities”, Aldemaigi added.
Focusing in FinTech signified the growing maturity of the Saudi market
The Deputy reported that another key development that signified the growing maturity of the Saudi market was the focusing in the Financial Technology (FinTech) lab, which is a significant step to compete other financial markets. By the end of 2022, the number of Fintech permits reached 29, a 262.5% increase from the total permitted in 2020.
CMA is continuing to work on developing areas such STO, crypto assets, and open finance. Recently, CMA announced receiving financial technology business models related to security token offering (STO) on Q4 of 2022, and 3 applicants already.
Aldemaigi concluded that for empowering Tokenization, CMA will continue conducting studies to define an approach for implementing different crypto assets in the capital market, aiming to study the risks involved and take advantage of these opportunities to determine the optimal regulatory direction for such activities, in light of the development of mechanisms for dealing and keeping records and data between traders in the capital market. Further, CMA will adopt a new initiative to provide an opportunity for those interested to present business models related to open finance applications to maximize the benefit of sharing customer data with others in ways that add value to them, creating and introducing new financial products and services, increase competition by enabling new competitors to enter the market, and enable the ability to Data aggregation.
Capital Market Authority
Communication & Investor Protection Division
The Capital Market Authority (CMA) in Saudi Arabia unofficially started in the early fifties, and continued to operate successfully, until the government set its basic regulations in the eighties. The current Capital Market Law is promulgated and pursuant to Royal Decree No. (M/30) dated 2/6/1424H, which formally brought it into existence. The CMA is a government organization applying full financial, legal, and administrative independence, and has direct links with the Prime Minister.
For more information about CMA, please visit the official website: www.cma.org.sa