Tadawul IPO: Saudi Arabia is gearing up for a wave of initial public offerings (IPOs) in 2023, aiming to bolster its economy and create financing channels for emerging sectors. The Capital Market Authority (CMA) released a report highlighting the Kingdom’s strategy to attract foreign investors, increase their ownership in the market, and enhance institutional investments. With a vision to build an advanced and open financial market, Saudi Arabia aims to meet the funding requirements of its ambitious Vision 2030 plan. This article delves into the CMA’s plans, the recent performance of the Saudi capital market, and the measures being taken to establish a vibrant financial landscape.
Boosting Market Appeal and Institutional Investment
In its strategic plan for 2021-2023, aligned with the Financial Sector Development Program and Vision 2030, the CMA focuses on transforming the Saudi capital market into an advanced and globally appealing platform. The report highlights the authority’s target to increase the foreign investors’ ownership of free float shares to 16.5 percent by the end of 2023. To attract institutional investment, the CMA plans to raise the percentage of assets under management to gross domestic product to 27.4 percent by the close of the current year.
Expanding Debt Instruments Market
The CMA recognizes the significance of the debt instruments market and aims to expand its size as a percentage of GDP to 20.1 percent by the end of 2023. This expansion provides diverse financing options for businesses and stimulates economic growth. By promoting debt instruments, Saudi Arabia seeks to attract both local and international capital, further solidifying its position as a global financial hub.
Regulating Securities Service Providers and Encouraging Innovation
In addition to the IPOs and market expansion, the CMA is dedicated to developing and regulating the securities service providers sector. This move ensures a robust and transparent financial infrastructure, boosting investor confidence. The authority also emphasizes the importance of embracing innovative business models and emerging technologies that have the potential to revolutionize the financial services industry. By leveraging these advancements, Saudi Arabia aims to elevate its finance and investment landscape.
Nurturing Qualified Human Capital
Recognizing the pivotal role of skilled professionals in the securities sector, the CMA intends to establish programs that cultivate and provide qualified human resources. By nurturing talent and expertise, Saudi Arabia ensures a sustainable growth trajectory for its financial markets. This commitment to human capital development aligns with the broader objective of attracting and retaining top-tier professionals in the country’s financial industry.
Impressive Performance and Global Positioning
The Saudi capital market witnessed remarkable activity in 2022, with 49 IPO listings and an equity capital raising of SR40 billion ($10.66 billion). This impressive achievement marked the second-highest number of IPOs in a single year, surpassed only by the historic listing of Saudi Aramco in 2019. Chairman of the CMA, Mohammed El-Kuwaiz, emphasized Saudi Arabia’s aspirations to establish an advanced capital market that is globally accessible and capable of attracting both local and international investors. With the increasing proportion of foreign investors in terms of ownership and trading, the Kingdom aims to continuously improve regulations and enhance market accessibility.
Saudi Arabia’s ambitious plans for a series of IPOs in 2023, coupled with efforts to attract foreign investors, enhance institutional investments, and expand the debt instruments market, reflect its commitment to building a robust and globally competitive financial market. The CMA’s strategic roadmap aligns with the goals of Vision 2030, fostering economic growth, and providing financing channels for emerging sectors. By embracing innovative technologies and prioritizing human capital development, Saudi Arabia positions itself as a leading destination for investments and a significant player in the global financial landscape.
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FAQ’s
Q1: What is tadawul?
Tadawul, also known as the Saudi Stock Exchange, is the main securities exchange in Saudi Arabia. It is one of the largest stock exchanges in the Middle East and North Africa region. Tadawul is regulated and supervised by the Capital Market Authority (CMA) in Saudi Arabia.
Q2: What is Saudi Arabia’s strategy for attracting foreign investors and increasing their ownership in the market?
A1: Saudi Arabia aims to attract foreign investors and increase their ownership in the market as part of its strategy to build an advanced and open financial market. The Capital Market Authority (CMA) plans to increase the foreign investors’ ownership of free float shares to 16.5 percent by the end of 2023, as stated in their strategic plan aligned with the Financial Sector Development Program and Vision 2030.
Q3: How does Saudi Arabia plan to enhance institutional investments in its capital market?
A2: Saudi Arabia aims to enhance institutional investments in its capital market by raising the percentage of assets under management to gross domestic product (GDP) to 27.4 percent by the end of the current year, as outlined in the CMA’s strategic plan for 2021-2023. This goal is aligned with the country’s vision to transform the Saudi capital market into an advanced and globally appealing platform.
Q4: What is Saudi Arabia’s approach to expanding the debt instruments market?
A3: Saudi Arabia recognizes the significance of the debt instruments market and intends to expand its size as a percentage of GDP to 20.1 percent by the end of 2023. By promoting debt instruments, the country aims to provide diverse financing options for businesses and stimulate economic growth. This expansion is part of Saudi Arabia’s strategy to attract both local and international capital and solidify its position as a global financial hub.
Q5: How does the Capital Market Authority (CMA) regulate securities service providers in Saudi Arabia?
A4: The CMA is dedicated to developing and regulating the securities service providers sector in Saudi Arabia. By doing so, it ensures a robust and transparent financial infrastructure, which boosts investor confidence. The authority emphasizes the importance of embracing innovative business models and emerging technologies that have the potential to revolutionize the financial services industry. By leveraging these advancements, Saudi Arabia aims to elevate its finance and investment landscape.