One golden rule in investment is to have a diversified portfolio. A stock exchange is a marketplace where traders and stockbrokers can buy and sell equities products. If you want to invest in companies listed on the Saudi share market and tap into the biggest economy in the Middle East, this guide is for you.
Saudi Stock Exchange: In numbers
As of December 2023, the Saudi Stock Exchange, or Tadawul, is the 11th largest stock exchange operator globally in terms of market capitalization. Its market capitalization reached $3.02 trillion, a 14 percent increase from the previous year.
Meanwhile, the value of all traded shares in 2023 hit $355.5 billion, with the number of trades made totaling 94 million.
How to invest in Saudi’s share market
Here’s a brief guide on how to start your investment journey in the Saudi share market.
Step 1: Assess your risk appetite
Before anything else, it’s essential to know that investing in any stock exchange has its own risks. You must familiarize yourself with the potential returns and risks of the different types of products being traded on the market, especially in the context of Saudi Arabia.
Step 2: Know the eligibility
To trade in Tadawul, you must be a Saudi national or a national from any other member state of the Gulf Cooperation Council (GCC). If you’re an expatriate, you must be a registered Saudi resident.
Step 3: Get in touch with a member firm
If you’re eligible, you must visit a Tadawul member firm to open an investment portfolio. You can find the directory of members here. The member firm will give you further instructions and more information. Note that before the member firm proceeds with all these, it will verify your eligibility first. The basis will be the guidelines made by the Securities Depository Center Company (also known as Edaa).
Step 4: Submit required documents
After the member firm verifies that you’re eligible to open an investment portfolio, you must gather certain document/s. As an individual investor who is a Saudi or GCC national, you must submit a copy of your identification card or family card. If you’re a non-GCC national, you must prepare a copy of your valid residency license card (Iqama) and passport.
An alternative
Even if you don’t open an investment account on Tadawul, there’s another way to invest in the Saudi share market — and that is by investing in iShares MSCI Saudi Arabia ETF (KSA). Traded on U.S. exchanges, this exchange-traded fund “seeks to track the investment results of a broad-based index composed of Saudi Arabian equities.” It means you can be exposed to a basket of top Saudi Arabian companies, including Al Rajhi Bank, Saudi National Bank, Aramco, SABIC and stc.
To begin investing in KSA, you must choose a reputable broker and open a trading account on its platform. Next, link your bank account with your trading account. Doing so can help you easily fund your trading account with money you can use to start investing.
Read: How to invest in the stock market
Final thoughts
Investing in the Saudi share market, whether directly through Tadawul or via iShares MSCI Saudi Arabia ETF (KSA), offers a unique opportunity to diversify your portfolio. And it’s not just about expanding your investments. You can also tap into the potential of the biggest Middle Eastern economy.
As emphasized, you must be wise by knowing your risk appetite and having a good grasp of the equity products you’re investing in. Staying updated on the Saudi economy and market trends is also essential.
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