Saudi Arabia’s financial market is undergoing a structural shift as short-term speculative trading gives way to institutional investment through funds, managed portfolios and sukuk, according to Ahmed Al-Mohaisen, chief executive of Ashmore Investment Saudi Arabia.
In an interview with Asharq Al-Awsat, Al-Mohaisen said the Kingdom’s economy is increasingly driven by domestic structural factors rather than oil cycles, with sectors such as education and industry offering some of the market’s most overlooked investment opportunities.
He noted that Saudi Arabia has shown resilience despite high global interest rates, geopolitical uncertainty and slowing growth, supported by a strong fiscal position and ongoing reforms under Vision 2030.
“What distinguishes the Saudi market today is that growth is increasingly driven by local structural factors, not just oil cycles,” Al-Mohaisen said, citing investment in infrastructure, industry, tourism, education and technology.
Sukuk market expansion
Al-Mohaisen stressed that the Saudi sukuk market is maturing rapidly, with issuances rising 35 percent in 2025 to around $72.5 billion. The momentum has continued into the first quarter of 2026. He explained that sukuk have become a major funding tool for Vision 2030 projects while attracting foreign investors seeking stable returns, supported by Saudi Arabia’s strong credit profile and inclusion in global debt indices.
On liquidity, Al-Mohaisen said the market is not facing a shortage but rather a more selective allocation of capital toward companies and sectors with stronger valuations and growth prospects.
He cited data released on May 1, 2026, showing monthly trading volumes of about SAR125.5 billion ($33.4 billion) and a market capitalization of nearly SAR9.94 trillion ($2.64 trillion).
Greater clarity on the path of interest-rate cuts could encourage investors to return to long-term assets, he added, pointing to growth in managed assets, expanding investment funds and rising foreign participation as signs of a maturing market.
Higher rates reshape investor appetite
According to Al-Mohaisen, high interest rates affect investor behavior in three ways. First, they raise the required return on riskier assets, making investors more selective toward equities, real estate and private investments when fixed-income instruments offer attractive yields.
Second, they pressure valuations of highly leveraged companies and firms reliant on long-term growth expectations, while favoring businesses with strong cash flow and stable dividends.
Third, higher borrowing costs weigh on companies and consumers, although the impact varies by sector. Banks may benefit from wider margins, while heavily indebted real estate firms are among the most exposed.
Education and industry seen as key opportunities
The CEO of Ashmore said several opportunities in the Saudi market remain underexploited, particularly private investment in mid-sized companies.
While investor attention has centered on mega-projects and private real estate, he noted that high-quality growth companies still lack sufficient institutional backing and operational expertise. He also identified opportunities in specialized education platforms, industrial services, logistics infrastructure and healthcare.
Al-Mohaisen was particularly upbeat on education, calling it one of the Kingdom’s most attractive long-term investment sectors due to demographic growth, rising demand for quality education and alignment with Vision 2030 goals.
He said Ashmore’s education fund has completed several deals, including the “Hikma” project, which aims to expand capacity from 3,500 to 5,500 students, and the “Oasis” project for American schools in eastern Riyadh, where capacity increased from 1,700 to 4,700 students.
The industrial sector also offers strong potential as Saudi Arabia pushes to localize production, strengthen supply chains and expand non-oil exports, he underlined. Ashmore’s education and industrial funds are jointly targeting a total size of SAR1.4 billion ($373 million).
Al-Mohaisen said the private sector’s contribution to GDP rose to around 51 percent by the end of 2025, moving toward the government’s target of 65 percent by 2030.
But he stressed that the next phase will require the private sector to move beyond benefiting from government spending and instead drive growth through investment, productivity, innovation and job creation.
He added that institutional investors and asset managers should act not only as providers of capital, but also as strategic partners in Saudi Arabia’s economic transformation.
