Saudi capital market strategy set to boost growth, transparency

The Capital Market Authority aims to double the number of fintech companies licensed by 2026, with a focus on open finance applications and regulatory support for startups. File
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Updated 13 January 2025
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Saudi capital market strategy set to boost growth, transparency

  • Capital Market Authority initiatives to transform capital market into a key pillar of the national economy

RIYADH: Saudi Arabia’s Capital Market Authority has unveiled its ambitious 2024-2026 strategic plan, which aims to further develop the Kingdom’s financial market and enhance its global competitiveness.

With more than 40 initiatives, the plan is set to transform the capital market into a key pillar of the national economy, in line with Vision 2030.

In an interview with Arab News, Constantin Cotzias, European director at Bloomberg LP, said that the plan’s alignment with Vision 2030 is crucial to drive Saudi Arabia’s economic diversification through robust financial integration and growth. 

“The strategy emphasizes capital market development as a key enabler of economic growth by expanding financing options, promoting investment opportunities, and attracting international capital,” said Cotzias. 

He added that the sukuk and debt markets will play a key role in financing large-scale infrastructure and sustainable investments, driving the Kingdom’s non-oil economy.

Strategic pillars

The CMA’s strategy is built around three main pillars: market growth, ecosystem enablement, and investor protection.

The first pillar focuses on enhancing the capital market’s position in financing and investment. This includes expanding the stock market’s role in capital raising, developing sukuk and debt instruments, and enabling the asset management industry to attract more international investment. 

“Competitive valuations and robust market liquidity are essential for attracting investors, making Saudi debt instruments more appealing than global alternatives,” Cotzias added. 

The strategy emphasizes capital market development as a key enabler of economic growth by expanding financing options, promoting investment opportunities, and attracting international capital.

Constantin Cotzias, European director at Bloomberg LP

A key component of this pillar is the CMA’s focus on increasing the size of the debt instruments market to 24.1 percent of gross domestic product by 2025. Cotzias explained that achieving this target will require regulatory reforms that enhance market accessibility for global investors and improve liquidity. 

Martin Rauchenwald, managing partner at Arthur D. Little, told Arab News that deepening the market and increasing foreign investor participation is essential for creating a more liquid and resilient market that can withstand global economic volatility. 

Furthermore, simplifying the regulatory framework for issuing and listing debt instruments will significantly speed up capital market activities. 

Rauchenwald compared this to international benchmarks, noting that markets like the US and EU have streamlined their processes to allow for higher volumes of bond activity, which is a goal Saudi Arabia is striving for.

The second pillar emphasizes enabling the capital market ecosystem, particularly through support for financial market institutions and fintech innovation. 

The CMA aims to double the number of fintech companies licensed by 2026, with a focus on open finance applications and regulatory support for startups. 

Mohammad Nikkar, principal at Arthur D. Little Middle East, highlighted the importance of the CMA’s Fintech Lab initiative, which provides a controlled environment for fintech companies to experiment and grow. 

“The CMA’s sandbox approach balances regulatory oversight with the flexibility needed to foster fintech startups and innovation,” Nikkar told Arab News. 

Deepening the market and increasing foreign investor participation is essential for creating a more liquid and resilient market that can withstand global economic volatility.

Martin Rauchenwald, managing partner at Arthur D. Little

The growth of fintech is expected to enhance competition and operational efficiency in the financial market. By promoting innovation and integrating advanced technologies, the CMA aims to streamline financial operations and improve access to services for both institutional and retail investors.

The third pillar focuses on protecting investors’ rights by improving transparency and supervisory mechanisms. 

Cotzias pointed out that enhancing compensation mechanisms and dispute resolution processes are vital for building investor confidence, particularly among retail investors. 

Drawing comparisons with the UK’s Financial Services Compensation Scheme, Cotzias noted that these measures reassure both local and international investors, ensuring that the market operates under a robust regulatory system.

Key initiatives

Among the 40 initiatives under the CMA’s strategy, the introduction of Special Purpose Acquisition Companies in the parallel market and the issuance of Saudi Depositary Receipts stand out. 

These steps are expected to diversify investment opportunities and attract both domestic and international investors. Rauchenwald emphasized the importance of SDRs in boosting cross-border investment, adding that this move is aligned with the CMA’s goal of integrating Saudi markets globally.

In addition to facilitating debt market growth, the CMA is committed to developing regulatory frameworks for green, social, and sustainable debt instruments. 

Cotzias emphasized that the lack of international standardization for sustainable finance products presents a challenge but added that the CMA’s efforts to align with global practices will attract more investment into green finance. 

“Saudi Arabia can draw inspiration from frameworks like the EU’s Green Bond Standard, which reduces greenwashing risks and improves comparability,” he said.

The CMA’s green sukuk initiative is a significant milestone for the Kingdom’s environmental, social, and governance goals. Nikkar pointed out that Saudi Arabia’s competitive edge lies in its ability to combine Islamic finance with global sustainability goals. 

“Green sukuk aligns with international best practices while leveraging Saudi Arabia’s leadership in Islamic finance,” he explained.

The CMA’s goal is to increase the stock market’s value to 80.8 percent of gross domestic product by 2025, up from 66.5 percent in 2019. This will be achieved by expanding investment opportunities, including sustainable and green sukuk, and by simplifying regulatory procedures to encourage more companies to list on the market.

Focus on fintech and innovation

The CMA’s strategy places significant emphasis on supporting financial technology innovation. 

As Nikkar noted, the regulatory flexibility provided by the Fintech Lab allows startups to experiment with new business models in a controlled environment without being subject to the full regulatory burden typically imposed on licensed capital market participants. 

This fosters a dynamic fintech sector while ensuring consumer protection.

By encouraging fintech growth, the CMA is enhancing the overall efficiency and competitiveness of the financial market. This initiative will not only benefit startups but also push traditional financial institutions to innovate and offer better services to meet the evolving needs of investors.

Rauchenwald added that the CMA’s focus on fintech innovation, combined with its risk-based supervision model, will reshape the competitive landscape for banks, brokers, and asset managers in Saudi Arabia. 

“Fintech growth will disrupt traditional players, prompting them to innovate and compete more aggressively,” he said.

Achievements and future targets

The CMA’s 2024-2026 plan builds on the successes of its previous 2021-2023 strategy, which saw a 52 percent increase in the number of listed companies — rising from 204 in 2019 to over 310 by the end of 2023. 

The value of managed assets also grew by 74 percent during this period, reaching SR871 billion ($231.9 billion).

Rauchenwald highlighted the significance of the new procedures for class action compensation, which allow groups of investors to file lawsuits collectively and seek compensation for misconduct. 

“This is a major step forward in promoting investor confidence and holding companies accountable,” he said, comparing it to global standards seen in the US and Europe.

Looking ahead, the CMA aims to continue growing the asset management industry by introducing more flexible regulatory frameworks for investment funds. 

Cotzias noted that easing regulatory barriers for foreign investors will be critical in boosting Saudi Arabia’s competitiveness, especially in sectors such as real estate, renewable energy, and technology.

International competitiveness

One of the key goals of the CMA’s 2024-2026 strategy is to enhance the Saudi financial market’s international appeal. 

By implementing regulatory reforms, improving transparency, and promoting ESG-aligned financial products, the CMA aims to position Saudi Arabia as a leading regional and global financial hub.

Nikkar emphasized that diversifying financial products, particularly in Islamic finance, will help Saudi Arabia stand out against regional competitors like Dubai and Qatar. 

“The Kingdom’s leadership in Islamic finance, combined with its commitment to sustainability, gives it a competitive edge in attracting both regional and international investors,” he said.

In terms of attracting foreign investors, Cotzias pointed out that the CMA’s review of foreign investor restrictions, including simplified registration and increased ownership limits, will enhance Saudi capital markets’ appeal to global investors.

Investor protection and governance

Central to the CMA’s strategy is the protection of investors’ rights. The authority plans to strengthen corporate governance practices across listed companies and investment funds. 

According to Cotzias, these governance reforms are expected to raise the accountability of board members, improving investor trust in Saudi financial institutions.

The CMA’s focus on improving transparency and supervisory mechanisms will also enhance investor protection. By simplifying procedures for compensation and complaints resolution, the CMA aims to create a more transparent and accountable market environment.


PIF to sell Thiqah to Elm in $907m deal to strengthen Saudi Arabia’s ICT sector

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PIF to sell Thiqah to Elm in $907m deal to strengthen Saudi Arabia’s ICT sector

RIYADH: Saudi digital solutions company Elm has agreed to acquire Thiqah Business Services Co., owned by the Public Investment Fund, in a deal valued at $907 million to boost the information and communications technology sector. 

Elm has signed a share purchase agreement with PIF to acquire Thiqah in a cash transaction following discussions initiated in 2023, the company said in a bourse filing. 

The deal involves the purchase of 45,000 shares, each with a nominal value of SR1,000 ($266.56), representing the entire issued share capital of Thiqah. 

The acquisition is expected to play a pivotal role in advancing Saudi Vision 2030’s goal of fostering digital transformation, creating high-skilled jobs, and supporting economic diversification, the company said in a press release. 

“This is an important transaction for Elm, as it enhances integration, rationalizes spending, increases profitability, and provides qualitative advantages for both parties and the market,” said Mohammad Abdulaziz Al-Omair, the CEO of Elm. 

He said the integrated entity will be better positioned to deliver advanced national smart services, meeting market requirements and client needs. 

“It will also contribute to facilitating innovative operations and capabilities to develop products in the business field with cost advantages, while achieving economies of scale,” added Al-Omair. 

The transaction, subject to regulatory approvals and fulfilment of agreement conditions, marks a strategic move to enhance Saudi Arabia’s information and communication technology ecosystem. 

The transaction further aligns with PIF’s broader strategy of enabling the Kingdom’s digital transformation by supporting high-impact investments in key sectors. 

“PIF is committed to enabling the creation of national champions who contribute to driving the development and growth of the Saudi economy. said Shahd Attar, head of technology and media, MENA Investments, at PIF.

“PIF’s sale of Thiqah to Elm will enhance the ICT sector’s vital role and strengthen efforts to localize technology and drive innovation,” Attar added.

The ICT industry is considered a fundamental enabler for multiple other sectors, including entertainment, financial services, health care, transport and logistics, and utilities and renewables. 

As one of the largest and most influential sovereign wealth funds in the world, PIF plays a leading role in driving Saudi Arabia’s economic transformation. 

Since 2015, PIF has significantly expanded its investments, establishing 99 companies and focusing on 13 strategic sectors both domestically and globally. 

PIF’s Vision 2030-aligned investment strategy prioritizes key industries that contribute to local content development, private sector partnerships, and technological localization. 

The sale of Thiqah to Elm is part of PIF’s broader efforts to maximize the value of Saudi assets while reinforcing its commitment to a knowledge-based digital economy. 


Oil Updates — crude steady as investors watch Trump 2.0 policies

Updated 47 min 52 sec ago
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Oil Updates — crude steady as investors watch Trump 2.0 policies

SINGAPORE: Oil prices were little changed on Wednesday as markets weighed US President Donald Trump’s declaration of a national energy emergency on his first day in office and its impact on supply.

Brent crude futures rose 9 cents to $79.38 per barrel at 7:20 a.m. Saudi time, while US West Texas Intermediate crude futures inched up 1 cent to $75.84.

The contracts settled lower on Tuesday after Trump laid out a sweeping plan to maximize oil and gas production, including by declaring a national energy emergency to speed permitting, rolling back environmental protections, and withdrawing the US from the Paris climate pact.

“Market participants are trying to digest the mixed signals that Trump 2.0 bring for the trajectory for oil prices,” said Yeap Jun Rong, market strategist at IG.

“Near-term focus will be on whether his aim to fill up the US strategic reserves materializes,” said Yeap, adding that attention is on his upcoming tariff policies.

Trump’s latest energy policy is unlikely to spur near-term investment or change US production growth, analysts at Morgan Stanley wrote in a note, adding that it could, however, moderate potential erosion of refined product demand.

Analysts also questioned if Trump’s promise to refill the strategic reserve would make any changes to oil demand as the Biden administration was already purchasing oil for the emergency stockpile.

Investors also remained cautious as Trump’s trade policy remained unclear. He said he was thinking of imposing 25 percent tariffs on imports from Canada and Mexico from Feb. 1, rather than on his first day in office as previously promised.

The US president also added that his administration would “probably” stop buying oil from Venezuela, among the top suppliers of oil to the country.

Meanwhile, a rare winter storm churned across the US Gulf Coast on Tuesday, and much of the US remained in a dangerous deep freeze.

North Dakota’s oil production was estimated to be down by between 130,000 and 160,000 barrels per day due to extreme cold weather and related operational challenges, the state’s pipeline authority said on Tuesday.

The impact of the storm on oil and gas operations remained limited in Texas, with minimum interruptions in gas flows, few power outages and plenty of gasoline inventories at the pump, as many roads and highways remained closed.


WEF panelists call for systemic policy shifts to help developing countries out of global debt crisis

Updated 22 January 2025
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WEF panelists call for systemic policy shifts to help developing countries out of global debt crisis

  • At World Economic Forum Annual Meeting in Davos, they urge governments and lenders to take shared actions to build strong, resilient economies and relieve debt burdens
  • Developing countries have accrued twice as much debt since 2010 compared with those in the developed world

DUBAI: The international community must devise ways to help nations in the developing world out of the global debt crisis and safeguard societies from the long-term effects of economic stagnation.

This was the message from a panel of experts during a discussion at the World Economic Forum Annual Meeting in Davos on Tuesday. Amid global transformations and ongoing uncertainty, they called for shifts in domestic and global monetary policies to provide relief for countries with debt burdens, and for governments and lenders to take shared actions to help build strong and resilient economies.

An International Monetary Fund report published in October stated that global pubic debt was expected to exceed $100 trillion during 2024, representing about 93 percent of global gross domestic product. Developing countries have accrued twice as much debt since 2010 compared with those in the developed world, according to UN figures..

The COVID-19 pandemic, climate change and unprecedented hikes in interest rates have compounded this debt crisis in some countries, potentially jeopardizing the futures of generations to come and slowing global progress.

Rebeca Grynspan, the secretary-general of UN Trade and Development, called for change at a systemic level to help countries take proactive steps to avoid debt problems in an ever-changing world.

“The developing world has half the debt that developed world has, the problem is paying for it,” she said.

“Firstly, we should avoid a liquidity problem becoming a debt problem. We have instruments that we don’t use in the international system, like special drawing rights.

“Secondly, the developing countries need long-term loans. If you go for infrastructure, you really want to grow, you need long-term money.”

For a monumental shift to take place, multilateral development banks need to scale up, take risks and crowd in private investment, Grynspan added.

About 3.3 billion people live in countries that spend more servicing debt than they do on education or health, according to a report published by the UN in July 2023.

“Markets are not in crisis but people are,” said Grynspan. “We don’t have a debt fault, but we have a development fault and that in turn will come to hunt us because if you cannot have growth in these countries, then we will not be able to get onto a sustainable path.”

Andre Esteves, chairperson and senior partner of Brazilian financial company Banco BTG Pactual, warned that a trade war between US and China during Donald Trump’s second term as president might affect other countries. However, he also highlighted positive indicators among the policies of the new administration in Washington.

“The whole idea of more fiscal discipline, ranging from deregulation and private-sector growth,” he said by way of examples. “But there needs to be the core of regulatory framework, otherwise it would be a bad move.”

As the debt crisis fuels power imbalances, dominance is expected to skew toward China, said Simon Freakley, the chairperson and CEO at global consulting firm AlixPartners.

“In today’s world, where developing countries are struggling to pay back their debt, they need to borrow more,” he noted, adding that China is able to exert significant influence as its capital markets are wide open to commodity-rich countries unwilling to borrow more money or service a debt.

Rania Al-Mashat, Egypt’s minister of planning, economic development and international cooperation, said macroeconomic stability needs to be coupled with structural reforms that improve the business environment to attract investment, reduce burdens and support the green transition.

Amid escalating conflicts in the Middle East and North Africa region, policies must be adopted to help mitigate the effects of various types of shocks, she added. For example, an IMF-supported Egyptian program was approved in December 2022 with the aim of achieving macroeconomic stability and encouraging private-sector-led growth.

“The manufacturing sector could benefit from inflows there,” Al-Mashat said. “We are also trying to put stringent ceilings on public investment so that the private sector can come in. All of these are drivers for growth financing for development.”

She called for a rethinking of global financial architecture to help more middle-income, emerging economies find alternative financing, such as debt swaps, for climate action or development.

Mohammed Aurangzeb, Pakistan’s minister of finance and revenue, warned of the long-term effects of economic stagnation. He said his country this month entered into a 10-year partnership with World Bank Group to address the issues of climate change and population.

“Population means child stunting, learning poverty and girls out of school,” he says. “There’s also climate resiliency and decarbonization. Unless we address this, the medium-to-long-term growth is not going to be sustainable.”


UAE’s economy minister says Middle East desires ‘more peace’ as US President Trump takes charge

Updated 22 January 2025
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UAE’s economy minister says Middle East desires ‘more peace’ as US President Trump takes charge

  • Abdulla bin Touq Al-Marri speaks of need to strengthen historic ties with US
  • GCC region has experienced significant economic growth over past 50 years
  • Emirati minister spoke on panel addressing geopolitical, environmental issues
  • Minister shares hopes of Dubai becoming ‘20-minute commute’ city

DAVOS: Arab Gulf countries want to strengthen their historic ties with the US under the new administration of President Donald Trump as the Middle East urgently needs peace and stability, according to the UAE’s Minister of Economy Abdulla bin Touq Al-Marri.

The Emirati minister spoke at the World Economic Forum in Davos on Tuesday and said that the UAE was the US’ No. 1 commerce partner within the Gulf Cooperation Council, with a bilateral trade of $40 billion annually.

He added that the relationship between the UAE and the US was an example of the strategic ties that Washington had forged with other GCC countries, such as Oman and Bahrain.

Al-Marri said the GCC region had experienced significant economic growth over the past 50 years. However, the Middle East continued to be a volatile region, riddled with political and armed conflicts.

Al-Marri said: “Now, what do we want in the region? We want more peace and we want more stability, and we want more growth for the region.”

He added that the UAE viewed its relationship with the US from a macro perspective and wished to continue on a strong and steady path during the Trump administration.

The Emirati minister was speaking on a panel called “Hard Power: Wake-up Call for Companies,” which addressed geopolitical and environmental issues related to corporations and investments.

Other panelists included Ukraine’s Deputy Prime Minister Yulia Svyrydenko; Nader Mousavizadeh, the CEO of Macro Advisory Partners; and Nir Bar Dea, the CEO of Bridgewater Associates.

Svyrydenko said that Ukraine faced a challenge in convincing investors and corporations to conduct business in a country locked in a conflict with Russia.

The deputy premier said that Ukrainian officials had done their homework to create a secure environment for investments in Ukraine, but that Kyiv was finding it challenging to meet the safety expectations of potential investors.

Svyrydenko said: “What kind of security guarantee do (investors) need? Do you need an anti-missile system in the industrial belts? Or do you need troops, or do you need NATO? It’s time for business to be more vocal about this and help us (answer) this issue.”

Ukraine's Deputy Prime Minister, Yulia Svyrydenko, said that Kyiv was finding it challenging to meet the safety expectations of potential investors (AFP)

Al-Marri said the UAE was “supportive” of the government of Ukraine when asked if Russian nationals residing in the UAE could return home if Trump helps to end the conflict in Eastern Europe.

There are no officially published figures regarding the number of Russian residents in the UAE although at least 1 million Russians visit the country annually as tourists.

Despite the potential for a tariff war between the US and China, Al-Marri stressed that the annual bilateral trade volume between Beijing and Abu Dhabi stood at $80 billion annually.

He said: “You can’t say ‘I need the world without China,’ and you can’t have the world without China; let’s be clear on that. You need China in this kind of trade domain.”

Al-Marri said that the UAE had “always built a bridge, always designed a supply chain” between regions.

He added: “We are ready for the world. We are very open, and we need corporations as well to think about the UAE as a place (for business and trade).”

He said that the UAE’s strategic location between East and West was ideal for companies connecting with various markets.

He added: “So, if you open a shop in Dubai or Abu Dhabi, you are operating the whole world.”

The minister shared his hopes of Dubai becoming a “20-minute commute” city, as its population is projected to reach 4 million next year.


Saudi Arabia raises $990m in sukuk issuances for January

Updated 21 January 2025
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Saudi Arabia raises $990m in sukuk issuances for January

RIYADH: Saudi Arabia’s National Debt Management Center has completed its riyal-denominated sukuk issuance for January, raising SR3.72 billion ($990 million).

In December 2024, the Kingdom raised SR11.59 billion through sukuk, while the amounts in November and October were SR3.41 billion and SR7.83 billion, respectively. Sukuk are Shariah-compliant debt instruments that provide investors with partial ownership of the issuer’s assets until maturity.

According to the NDMC, the January sukuk issuance was divided into four tranches. The first tranche, valued at SR1.25 billion, is set to mature in 2029. The second tranche, sized at SR1.40 billion, will mature in 2032, while the third tranche, worth SR1.03 billion, will mature in 2036. The fourth and final tranche was valued at SR28 million and will mature in 2039.

The consistent issuance of these Islamic bonds is in line with expectations outlined in a recent report by S&P Global, which projected that global sukuk issuance could reach between $190 billion and $200 billion in 2025.

The growth is largely expected to come from markets such as Saudi Arabia and Indonesia. S&P Global also reported that global sukuk issuances amounted to $193.4 billion in 2024, a slight dip from $197.8 billion in 2023.

Adding further optimism to the market, a report from Fitch Ratings released on Jan. 21 highlighted the expansion of the environmental, social, and governance sukuk market.

Fitch expects that outstanding global issuance of ESG sukuk will surpass $50 billion by 2025, with Saudi Arabia expected to play a significant role in this growth.

Meanwhile, a December analysis by Kamco Invest projected that Saudi Arabia would face the largest share of bond maturities in the Gulf Cooperation Council region between 2025 and 2029, with an estimated total of $168 billion.