RIYADH — During the second quarter of 2023, the Saudi capital market experienced steady growth as we continued to invest in infrastructure and build upon the strong foundations laid earlier in the year.
The macroeconomic environment in the region saw ongoing changes: while GDP growth in Saudi Arabia slowed, inflation declined between Q1 and Q2, ending five consecutive quarters of rising inflation.
However, despite these changing dynamics, the Saudi Exchange continues to succeed. We are on a path to develop an advanced capital market ecosystem. This ecosystem not only aligns with global best practices but also serves as a bridge between the Middle East and global markets.
In Q2 2023, market capitalization on the Main Market increased by 9.24 percent to SAR 10.90 trillion (US$2.9 trillion) when compared with Q1. Average daily value traded rose by 40.22 percent between Q1 and Q2 to SAR 5.90 billion (US$1.57 billion). Average daily volume traded rose by 13.79 percent between Q1 and Q2 to 298.70 million shares.
Meanwhile, the Nomu – Parallel Market’s market capitalization increased significantly, up 54.61 percent between Q1 and Q2 to SAR 59.88 billion (US$15.96 billion), bolstered by the listing of eight new companies. The number of trades on the parallel market increased by 19.81 percent from the previous quarter to 148,217.
The Nomu – Parallel Market hosts a diverse array of SMEs, spanning sectors such as information technology, materials, and consumer staples. In the Q&A section of this report, Nayef Al-Athel, the Saudi Exchange’s Chief of Listing, discusses in greater detail the objectives behind the Nomu – Parallel Market’s creation and its role in the ongoing diversification of the Saudi capital market.
As the Saudi Exchange continues to expand, attracting new investors and enhancing liquidity remains a key focus of our growth strategy. Developing a stronger, more accessible capital market helps us to expand the opportunities available for all investors, regardless of whether they are domestic or international.
This quarter, we continue to see the results of our efforts to attract foreign investors to our market. The value of qualified foreign investors holdings increased by 8.35 percent in the Main Market, and by 22.53 percent in the Nomu – Parallel Market between Q1 and Q2.
In addition, trading in Saudi Exchange’s sukuk and bonds market remained active. The number of trades rose by 10.61 percent compared with the previous quarter to 8,583 trades. The total size of issuance increased slightly, rising 0.53 percent between Q1 and Q2 to SAR 529.75 billion (US$141.26 billion).
This quarter, we focused on enhancing our market infrastructure and introduced several initiatives, including changes to the debt market; negotiated deals; introduction of drop copy; cancel on disconnect orders; request for quotes; and normal trade removal for the main market.
Moving into the third quarter of 2023, we will focus on introducing new products that will further align the Saudi capital market with global peers and provide further promising opportunities for growth.
Mohammed Al Rumaih is the CEO of Saudi Exchange. This was first published in the Capital Market Overview Report Q2 2023.
The opinions expressed are those of the author and may not reflect the editorial policy or an official position held by TRENDS.