Tadawul Ranks Among Top 10 Largest Global Exchanges

The Saudi Stock Exchange Company (Tadawul) now ranks among the top 10 largest exchanges globally in 2019 in terms of market capitalization, standing ninth among 67 financial markets in the World Federation of Exchanges (WFE), and third in terms of size among emerging markets.

“Tadawul accounts for the highest percentage of market capitalization/GDP ratio amongst leading emerging markets,” according to an annual report issued by Tadawul.

The initial public offering (IPO) of state-owned Saudi Aramco, the largest in history, helped the Saudi stock market witness a positive transformation, stated the report.

“Tadawul has taken a step to the next level in its evolution, and is well placed to realize its goal of becoming a global stock exchange.”

Tadawul chairperson Sarah al-Suhaimi said that the previous year was exceptional for the company and its accomplishments “give us much to build on and look forward to a great future for the Exchange.”

Suhaimi said Tadawul expects to expand the global and regional links to further enhance its image in the global stock market arena.

“We also look forward to the introduction of new products and services that will provide an even better fit with the needs of diverse investors.”

The inclusion of Tadawul into the Emerging Market Indices of MSCI and S&P, which was announced the previous year, was completed in 2019, according to the report.

The inclusion into the FTSE Russell Emerging Index was also largely completed, with the last out of five tranches being due in March 2020.

Tadawul has been included on two Emerging Market Indices (EMI), and it is ready to make Muqassa operational which will minimize risk.

The Securities Clearing Center Company (Muqassa) was established in 2018 to carry out securities clearing activities as a wholly owned subsidiary of Tadawul.

Tadawul CEO Khalid Abdullah al-Hussan stated that the inclusion of Tadawul in MSCI, S&P, and the anticipated inclusion in FTSE in 2020 were instrumental in bringing about the massive influx of QFIs that occurred during the year, with the numbers almost quadrupling from 500 to 1,800.

“The developments in 2019 set the stage for further improvements. In 2020, we will see the clearing subsidiary, Muqassa, becoming fully operational. This will bring about greater security for investors, as Muqassa will act as an intermediary in the trading,” said Hussan.

The drop in gross profit was caused by a decline in trading commission and income from securities depository services.

However, the report indicated that the net profit increased 3.4 percent to SAR153.3 million. The financial results have to be interpreted in the context of the heavy expenses incurred, both in technology and people, in preparation for and in connection with the Aramco listing, more of an “investment” for the future.

Tadawul is the sole authorized exchange in Saudi Arabia, the largest and only MENA country in the G20.