\n\tRIYADH: Saudi Arabia\u2019s financial markets are on a sharp upward trajectory despite challenging global economic trends, experts have told Arab News.<\/p>\n
\n\tMarket volatility across the world \u2014 as seen by the S&P 500 dropping below 6,000 on Wednesday \u2014 together with US President Donald Trump\u2019s policies prompting oil market uncertainty, and continuing supply chain disruptions, are increasing investment risks.<\/p>\n
\n\tHowever, the Kingdom\u2019s economic resilience, backed by Vision 2030\u2019s diversification efforts and strong regulatory reforms, has helped Saudi Arabia mitigate these challenges.<\/p>\n
\n\tIn 2024, the economy rebounded with a 1.3 percent growth, driven by a 4.6 percent increase in non-oil activities, despite a decline in oil activities.<\/p>\n
\n\tSaudi Arabia\u2019s financial ecosystem is poised for even greater growth, but the key question remains: Can it continue to solidify its position as a global financial hub in such an unpredictable environment?<\/p>\n
\n\tVikas Papriwal, leader of FTI Consulting Middle East and Africa, told Arab News the Kingdom is very much in charge of its own destiny in this regard.<\/p>\n
\n\t\u201cThe key to future-proofing against oil market volatility and maintaining leadership in the global energy industry is for Saudi Arabia to continue to place significant emphasis on researching, developing, and innovating in the space of renewable and sustainable energy and be leaders in the global energy transition,\u201d he said.<\/p>\n
\n\tSaudi Arabia\u2019s progress can also be seen in its extensive regulatory reforms. The country has worked hard to ensure that its financial markets align with international best practices, providing greater transparency, stability, and ease of access for investors.<\/p>\n \n\t\u201cReforms that can fortify the Kingdom\u2019s position as a financial powerhouse include further easing processes for operating and starting businesses, particularly through legal and tax reforms,\u201d said Papriwal.<\/p>\n \n\tRezwan Shafique, principal of financial services at Arthur D. Little, told Arab News that those reforms are just the starting line, emphasizing that the path toward becoming a powerhouse is now underway.<\/p>\n \n\t\u201cGovernment and regulatory reforms, such as Companies Law, CMA (Capital Market Authority) strategic plans, and MISA (Ministry of Investment) guidelines, have laid the groundwork by improving corporate transparency, stability, and predictability. The Kingdom is now in a phase to communicate opportunities to global players,\u201d Shafique added.<\/p>\n \n\tHe noted that Saudi Arabia has already made progress in this area, highlighting that the country\u2019s share in the MSCI Emerging Markets Index has risen to 4 percent from 2.7 percent in 2019. He also pointed out that foreign ownership in the Saudi Exchange has increased 25-fold over the past five years, reaching $100 billion, signaling expanding opportunities for global investors.<\/p>\n \n\t\u201cGaining traction on new listings and becoming a multi-jurisdictional player should be a key focus. A number of factors will need to converge, including Saudi Arabia actively forging ties between itself, China, Singapore, and African nations through strategic partnerships,\u201d he said.<\/p>\n \n\tIndeed, Saudi Arabia\u2019s ambition to lead the region in financial services is evident. Over the past few years, its exchange, Tadawul, has made tremendous strides, earning a spot among the top 10 global stock markets.<\/p>\n \n\tIts market capitalization reached $2.9 trillion as of late 2024, with the Kingdom continuing to attract significant foreign investments, especially in light of the world\u2019s largest initial public offering \u2014 Aramco\u2019s listing in 2019, which raised over $25 billion.<\/p>\n \n\t\u201cTadawul\u2019s inclusion in major global indices like MSCI and FTSE has increased foreign investor participation, while the size and scale of recent initial public offerings have showcased the Kingdom\u2019s ability to attract significant global capital,\u201d said Serkan Teker, financial services partner at Deloitte Middle East.<\/p>\n \n\tHe added that to rival global giants such as Wall Street and London, Saudi Arabia must continue evolving its capital markets by enhancing liquidity, diversifying sector representation, and improving transparency.<\/p>\n \n\tTeker also highlighted how the banking sector has been a significant driver of the Kingdom\u2019s non-oil gross domestic product expansion. It posted an \u201cimpressive annual growth of almost 11 percent between 2018 and the beginning of 2023, maintaining strong asset quality with non-performing loans gradually declining since the first shock waves of the COVID-19 pandemic.\u201d<\/p>\n \n\tBeyond the financial sector, Saudi Arabia\u2019s broader economic strategy also focuses on creating new business environments and fostering innovation to attract foreign investors.<\/p>\n \n\tTeker said: \u201cThe Kingdom could also look into creating new free zones and specialized economic zones for key areas of strategic focus, such as healthcare, biotech, and information and communications technology. Additionally, continued investment in transformative urban projects that allow KSA to act as a central hub for commerce and hospitality will further strengthen its position on the global stage.\u201d<\/p>\n \n\tThe Deloitte partner went on to explain that Saudi Arabia\u2019s rapid advancements in artificial intelligence, fintech, and digital banking are transforming the country into a global innovation hub. And he cited regulatory initiatives including the FinTech Sandbox and the adoption of Open Banking as helping the Kingdom become a magnet for tech startups and international investors.<\/p>\n \n\tHe added that initiatives such as digital-only banks and AI-driven solutions in finance and healthcare are positioning Saudi Arabia at the forefront of cutting-edge financial technology.<\/p>\n \n\tThe Kingdom\u2019s fintech market, in particular, has experienced exponential growth \u2014 up 25 percent in 2024 according to the Saudi Central Bank \u2014 reflecting the increasing importance of digital transformation to the economy.<\/p>\n \n\t\u201cSaudi Arabia is making significant investments in AI and related infrastructure, including a $40 billion tech fund and targeted investments in AI companies and startups. The launch of the Saudi Artificial Intelligence Authority is expected to accelerate innovation across key industries such as healthcare, finance, and manufacturing,\u201d FTI Consulting\u2019s Papriwal added.<\/p>\n \n\tTadawul, however, is not without its challenges. Geopolitical instability in the Middle East remains a persistent concern, and the volatility of global markets \u2014 particularly oil price fluctuations \u2014 continues to affect the broader economy.<\/p>\n \n\t\u201cTadawul needs to evolve in two ways: first, from a domestic exchange to multi-regional, and second, toward a technology company enabling financial services firms to develop and execute investment strategies,\u201d said Arthur D. Little\u2019s Shafique.<\/p>\n \n\tLooking ahead, Saudi Arabia\u2019s ability to expand its financial markets, further diversify its economy, and continue its digital transformation will be crucial in maintaining its upward trajectory.<\/p>\n \n\tThe Kingdom is already focusing on innovation, sustainable finance, and digital platforms as part of its broader Vision 2030 agenda. This vision positions Saudi Arabia not only as a regional player but also as a leader in global financial markets.<\/p>\n \n\tTeker emphasized that Saudi Arabia can strengthen its claim as a global financial powerhouse by expanding digital and financial inclusion through digital banking solutions and financial literacy programs would help reach underserved segments of the population.<\/p>\n \n\tAdditionally, he highlighted the importance of deepening capital market reforms, introducing advanced financial instruments, and attracting foreign participation to enhance liquidity and diversify investment options.<\/p>\n \n\tTeker also explained that by leveraging regulatory frameworks, fostering partnerships between banks and fintech firms, and attracting international digital players, Saudi Arabia can establish itself as a global fintech hub and strengthen its position in the rapidly evolving financial services sector.<\/p>\n \n\t\u201cWe believe some of these forward-looking actions, aligned with Vision 2030\u2019s ambitious goals, can further propel Saudi Arabia into global financial leadership while driving inclusive and sustainable economic growth,\u201d he said.<\/p>\n<\/div>\n![\"\"](\"https:\/\/www.arabnews.com\/sites\/default\/files\/pictures\/February\/3428266\/2025\/rezwan_shafique_principal_financial_services_arthur_d._little.jpeg\")