Tadawul Group CEO Khalid Al-Hussan outlines a three-pillar strategy for market expansion, leveraging AI and blockchain to fuel the next phase of growth under Vision 2030.
RIYADH – The Saudi Stock Exchange (Tadawul) is poised to launch a new generation of sophisticated investment products, with a sharp focus on debt instruments, derivatives, and data services. This strategic move is designed to capitalize on the market’s unprecedented growth and deepen its integration with the global financial system.
In an interview with Asharq Bloomberg, Khalid Al-Hussan, CEO of Tadawul Group, stated that the Saudi financial market is “going through the fastest stage of its development in decades.” He revealed that the exchange is “racing to innovate new products — from debt instruments to derivatives and data — in preparation for a digital expansion phase reliant on AI and blockchain.”
A Market Transformed: Listings and Liquidity Soar
The announcement comes on the heels of a remarkable period of expansion for the Saudi market. Over the past eight years, the number of listed companies has skyrocketed from 100 to over 380, spread across two markets with a combined capitalization exceeding $2.5 trillion.
Al-Hussan attributed this transformation to strategic expansion in products, listings, and capital formation. Since 2018, the amount raised through Initial Public Offerings (IPOs) has surpassed $130 billion. This growth has been paralleled by significant developments in debt instruments, exchange-traded funds (ETFs), and the recent introduction of derivatives.
This vibrant ecosystem has led to “significant changes and record foreign investor attraction,” with foreign ownership climbing to over $110 billion and more than 4,400 foreign investors now registered.
The Three Pillars of Future Growth
Al-Hussan detailed a three-pronged approach for Tadawul’s upcoming product offerings:
- Debt Instruments: The primary focus will be on developing the debt market, crucial for capital formation in both the public and private sectors. Plans are underway to enhance the secondary market and boost trading depth for these instruments.
- Derivatives: The exchange is implementing significant operational changes to its derivatives structure. New instruments are expected to enhance stock market liquidity and provide investors with expanded opportunities for hedging and diversification.
- Data as an Asset: Tadawul is positioning data as a standalone investment asset. “We have invested heavily in data over the past two years. It is not just a revenue stream, but a key element in deepening the market,” Al-Hussan said, predicting that data will become a key area of global competition among financial markets.
Open for Business: Aligning with Global Standards
Emphasizing the market’s readiness for international capital, Al-Hussan pointed to its inclusion in most major global stock indices as the clearest proof of its alignment with international standards. He noted that a similar phase is now beginning for debt instruments.
“International investors are ‘more comfortable than ever’ with the quality of Saudi market regulations and technology,” he added, highlighting the Kingdom’s move to open the market to all investors without a qualified investor framework as a “major” step that will further boost investment and liquidity.
Technology as a Catalyst
On the technological front, Al-Hussan disclosed that Tadawul’s innovation arm, Wamid, is actively studying AI, blockchain, digital assets, and machine learning to ensure the exchange remains at the forefront of global financial technology trends. This includes the acquisition of Direct Financial Network Co. (DirectFN) and the signing of over 13 technology agreements with international firms.
A Mirror of the Saudi Economy
Addressing the market’s correlation with the national economy, Al-Hussan firmly dismissed notions that it fails to reflect the Kingdom’s economic prosperity. He cited Vision 2030 as a definitive turning point, driving not only price increases but also a massive volume of new issuances.
This sentiment was echoed by a statement from the CEO of MSCI, who noted that “The Saudi market is the fastest market ever to be included in MSCI indices in its more than 20-year history.”
Capital Flows Shift to the Middle East
Al-Hussan also commented on broader global economic shifts, observing a “major repositioning” of capital towards the Middle East and Asia.
“Declining interest rates, the trade war truce, and shifting economic weight are all factors that enhance the Kingdom’s attractiveness,” he said, adding that there is a “noticeable capital outflow from Europe to more dynamic emerging markets, with Saudi Arabia at the forefront.”
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