From Vision to Reality: How Saudi Arabia is Reshaping the GCC Capital Market Landscape

In recent years, the Saudi capital market has outperformed many of its Gulf Cooperation Council (GCC) counterparts. Backed by a wave of policy reforms and a clear vision for transformation under Vision 2030, the Kingdom’s capital market has grown rapidly in both size and investor confidence.

A key driver of this growth has been the Saudi Vision 2030 initiative, which aims to diversify the economy and reduce reliance on oil revenues. Vision 2030 has spurred a series of reforms and initiatives to enhance the capital market's infrastructure and regulatory framework, making it more attractive to investors.

The Capital Market Authority (CMA) of Saudi Arabia has made significant strides in enhancing foreign investment through progressive regulatory reforms.

In 2021, they allowed foreign investors to participate in real estate funds with exposure to Makkah and Madinah. Building on this momentum, new regulations introduced in 2025 now permit foreign investment in listed companies operating in these two key cities.

As a result, foreign ownership in the Saudi capital market surged to over SAR 500 billion in Q1 2025, up from SAR 423 billion in 2024. According to a CMA spokesperson, this represents a year-on-year increase of more than 15%. This milestone reflects a historic turning point for the Kingdom, underscoring the growing appeal of its market to international investors.

Furthermore, Qualified Foreign Investor (QFI) ownership in the main market surged by 150% by the end of 2024 compared to 2019, with holdings rising from SAR 135 billion to SAR 337.5 billion—a testament to the Kingdom’s success in fostering a more open and attractive investment environment.

The CMA is actively engaged in enhancing the sukuk and debt markets through the implementation of a Debt Market Development Strategy and the removal of trading commissions on sukuk and bonds. These initiatives are designed to position the capital market among the foremost markets globally, with a dual focus on regional and international appeal, while attracting foreign investment and enhancing operational efficiency.

Recently, the Kingdom has made significant advancements in its global competitiveness, as evidenced by findings in the IMD World Competitiveness Yearbook. Saudi Arabia achieved advanced rankings in indicators related to the market, securing top positions among G20 countries in the Capital Markets Index, Market Capitalization Index, Shareholders’ Rights Index, and Venture Capital Index.

The Saudi Stock Exchange (Tadawul) has seen substantial growth in market capitalization, trading volumes, and the number of listed companies. In 2024, the Tadawul All Share Index (TASI) closed at 12,036.50 points, reflecting a 0.58% increase from the previous year. Market capitalization reached SAR 10.2 trillion (USD 2.72 trillion), maintaining Tadawul’s place as the largest exchange in MENA, representing 62% of the region’s total capitalization.

Saudi Arabia led the region in IPO volume; the UAE accounted for 49% of GCC IPO proceeds. Oman also witnessed significant activity with two major IPOs, followed by Bahrain and Kuwait, with one each.

As for the trading values across GCC stock markets from 2018 to 2024, Saudi Arabia has dominated the region by a wide margin, with a dramatic surge in trading value peaking around 2021 at nearly $600 billion, followed by a decline in 2022 and 2023, then a notable rebound in 2024. The UAE market, while significantly smaller in volume, saw a sharp rise between 2020 and 2022, indicating increased investor activity and capital market reforms, before stabilizing in 2023 and 2024. Other GCC markets, including Kuwait, Qatar, Bahrain, and Oman, maintained relatively steady but modest trading values throughout the period.

While the Saudi capital market has been on a growth trajectory, other GCC markets have also shown resilience, albeit at varying rates. The growth in Saudi Arabia's market capitalization and liquidity has been more pronounced, largely due to its larger size and the ambitious economic reforms under Vision 2030.

The ADX maintained its position as the second-largest bourse in the region and solidified its standing among the world's top 20 stock exchanges. DFM General Index soared by 27.1% in 2024, marking its largest annual gain in three years and outperforming other GCC markets. Nevertheless, the scale and impact of Saudi Arabia's market reforms have positioned it as a leader in the region.

Several key developments have contributed to the growth of the Saudi capital market:

• Regulatory reforms that have simplified participation for international investors have facilitated the rising value of foreign investors' holdings in the Saudi market and the influx of foreign capital.

• The Saudi Exchange has broadened its product offerings, offering investors more avenues to diversify their portfolios. The Saudi Exchange has established a strong pipeline of initial public offerings (IPOs), with 15 listings in the Main Market across various sectors in 2024, with a combined value of SAR 14.4 billion. This has not only increased market capitalization but also enhanced the diversity of investment opportunities available.

• The acquisition of a strategic stake in the Dubai Mercantile Exchange, now rebranded as the Gulf Mercantile Exchange (GME), has further solidified the Saudi market's position as a regional hub for commodities trading.

The growth of the Saudi capital market over the past few years has been impressive, driven by strategic reforms, increased foreign investment, and a commitment to economic diversification. While other GCC markets have also shown resilience, the scale and impact of Saudi Arabia's initiatives have set it apart as a leader in the region.

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