The efficient way to allocate private funds for corporate investments has always been a stock market. In Saudi Arabia, Tadawul is one of a kind international stock exchange. It is the largest stock exchange in the Gulf region. The physical office is located in the capital of Saudi Arabia in Riyadh. The stock exchange has at its disposal financial and bank services, Petrochemical industries, real estate and property development, hotels and tourism industry, cement, retail, food industry and agriculture, energy and utilities, telecommunications, transport, media and publishing (Tadawul Official website).
The stock exchange introduced to the world the first electronic market in the 1990s “comprising trading, clearing, settlement and depository” (Samba Financial Group, 2009). The quality of investors awareness about the current situation on the stock has been significantly improved since 2005 when the authorities awarded a number of foreign banks with investment banking licenses to provide brokerage services. For many years, however, Tadawul was opened for Saudi citizens only. Since 2007, it was gradually opening doors to foreign nations: in December 2007, Tadawul opened a part of its stock market for Gulf Cooperation Council (GCC) nations, however, until August 2008, their participation was limited.
2005-2006 was prolific years for Saudi Arabia stock market. In February 2006, the main index (TASI) reached the higher peak when it closed at 20,635. At this point, Tadawul was the world’s tenth largest stock market by value in spite of the fact that they have only 78 listed stocks. Expected corporate profit grew, running ahead its actual results and consequently ended 2006 year 53% below than it was in the beginning of the year.
References
Samba Financial Group. (2009). The Saudi Stock Market: Structural Issues, Recent.
Tadawul Official website https://www.tadawul.com.sa
