Standard & Poor's (S&P) affirmed on Tuesday that the Saudi Exchange, Tadawul, plays a pivotal role in the Kingdom’s economic transformation, serving as a strategic platform to attract capital to support Vision 2030 investments.
It also said that Tadawul has become a major platform for providing alternative sources of financing, by allowing the economy to diversify sources of funding and dependence on direct government funding.
According to a report issued by the credit agency on Wednesday, growth in equity markets will enable companies and financial institutions to allocate more capital toward investments while managing leverage.
It said Tadawul's market capitalization increased 463% to about $2.7 trillion as of Dec. 31, 2024, from about $483 billion at year-end 2014.
The agency showed that one of the key milestones was the IPO of state-owned national oil company, Saudi Aramco, in 2019, which raised $29.4 billion, significantly elevating Tadawul's market capitalization and global standing.
Between 2014 and 2024, it said Tadawul's main market hosted 91 IPOs for an aggregate offering value of about $65 billion, even excluding other listings such as Aramco's secondary offering of about $11.2 billion in July 2024.
As a result, the number of listed issuers on Tadawul's main market grew to 247 by year-end 2024 from 169 in 2014.
The rating agency noted that Tadawul now ranks as one of the largest exchanges among emerging markets, in terms of its market capitalization and is also the largest emerging equity market outside Asia.
Financing Vision 2030 Projects
These developments come at a time when the implementation of Vision 2030 speeds up in Saudi Arabia, estimated to cost more than $1 trillion.
The agency said Vision 2030 projects will require raising funds across several sectors.
“We project that the central government and the Public Investment Fund (PIF) will raise new debt of about $60 billion or 4.9% of GDP annually over 2025-2028,” it noted, adding that the government is also actively promoting investments from large corporates, especially government-related entities (GREs), aiming to channel 5 trillion Saudi riyals (approximately $1.3 trillion) into various sectors through the “Shareek” (partner) program.”
Largest Emerging Markets
According to S&P, Tadawul now ranks as one of the largest exchanges among emerging markets, in terms of its market capitalization and is also the largest emerging equity market outside Asia.
“However, despite strong growth over the past decade, we consider it to be still at an earlier stage of development relative to some major global markets,” it said.
The agency noted that as of year-end 2024, about 67% of the exchange's market capitalization came from Aramco's $1.8 trillion value, while the seven largest issuers represented more than 80%. Of these seven issuers, other than Al Rajhi, all are GREs.
It added that despite the IPOs of many private-sector companies, public-sector entities represent the bulk of new listings.
“These entities have generated about $44 billion of the estimated $65 billions of aggregate IPO value over the past decade,” the agency said.
“For example, in addition to Aramco, Ades Holding and ACWA undertook IPOs of $1.2 billion each; Tadawul raised $1 billion in its own offering, in addition to other public-sector entities,” it added.
