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Saudi Arabia Permits Foreigners to Directly Invest in Parallel Market

A Saudi investor monitors the stock exchange at the Saudi Stock Exchange, or Tadawul, on December 14, 2016 in the capital Riyadh. (AFP)
A Saudi investor monitors the stock exchange at the Saudi Stock Exchange, or Tadawul, on December 14, 2016 in the capital Riyadh. (AFP)
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Saudi Arabia Permits Foreigners to Directly Invest in Parallel Market

A Saudi investor monitors the stock exchange at the Saudi Stock Exchange, or Tadawul, on December 14, 2016 in the capital Riyadh. (AFP)
A Saudi investor monitors the stock exchange at the Saudi Stock Exchange, or Tadawul, on December 14, 2016 in the capital Riyadh. (AFP)

Saudi Arabia plans to make its capital market more accessible to foreign investors by giving them full access to NOMU, a parallel market recently launched for small and medium-sized enterprises, Mohammed El Kuwaiz, chairman of the Capital Market Authority (CMA) said on Thursday.

Non-resident foreign investors will be able to invest directly in the parallel market starting from January 1 next year.

This step comes within CMA’s strategic plans that aim at achieving Saudi Vision 2030. It also falls under the framework of organizing the financial market and developing its role in supporting the national economy. 

Kuwaiz affirmed that this step goes in tandem with the methodology followed by CMA which seeks to open the financial market for foreign investment.

The methodology stands on the concept of treating the foreign investor as the Saudi investor by empowering him to invest directly in the parallel market NOMU without having to be a QFI (Qualified Foreign Investor).

This step seeks to permit additional categories of investors to invest, at a time when qualification conditions required from foreign investors are the same as those requested from Saudis, Kuwaiz stressed.

CMA issued earlier a Guidance Note of the Investment of Non-Resident Foreigners in the Parallel Market that aims at clarifying the investment mechanism and restrictions related to it. Remarkably, categories allowed to participate in NOMU included qualified foreign investors and final beneficiaries in barter agreements. However, the guidance note included non-resident foreign natural people and legal entities complying with the stipulated standards in the definition of the qualified investor.

The first reaction to the CMA decision was that NOMU index rose 6 percent during Thursday’s trading, closing at 3,192 points.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.