Spotlight: Saudi Capital Market Witnesses YoY Surge in FDI

The resilience of Saudi capital market has entices global and domestic institutional investors to expand and set up a business in the Kingdom

The capital market has seen tremendous growth in 2024. Notable achievements include:

• Record-Breaking Growth in FDI: Net foreign investments in Saudi Arabia's capital market rose to $58.1 billion (SR218 billion) in 2024, marking a 10.1% increase over the previous year.
• Increased Participation of QFIs: The number of qualified foreign investors (QFIs) on Tadawul has surged from 100 to nearly 4,200.
• Ranked Highest Among G20: Saudi Arabia was ranked first among G20 nations in several capital market indicators, such as capital market performance, stock market capitalization, shareholders’ rights, and venture capital activity.

The Saudi non-oil economic growth is duly supported by a significant increase in its capital market.

A combination of factors has contributed to this growth, including robust regulations and rising investments in digital capabilities to strengthen the governance structure.

These elements have made the Kingdom one of the top destinations for domestic and global companies to set up a business and invest in.

Below is a summary of the major milestones in the Saudi capital market that have recently been announced.

Saudi Capital Market Attracts $58 Billion in FDI in 2024

Last year, the Saudi capital market reached a turning point, with FDI inflows registering a significant yearly growth, reaching $58.1 billion (SR218 billion).

Total foreign ownership reached $112.5 billion (SR423 billion), now representing 11% of all free-float shares.

These figures represent a significant improvement in Saudi Arabia's equities market, making it more appealing to international investors.

The International Institute for Management Development recognized this in 2024, ranking Saudi Arabia first among G20 nations across four capital market indicators, including the Capital Market Index, Stock Market Capitalization Index, Shareholders' Rights Index, and Venture Capital Index. The Kingdom also advanced across eight of the twelve tracked indicators.

The CMA’s 2024-2026 strategy focuses on deepening markets, increasing liquidity, and expanding the investor base to align with Vision 2030 goals.

Assets Under Management Cross $266 Billion Threshold

Another indicator of Saudi Arabia's advanced banking sector and strong asset management industry is the total value of the assets under management (AUM), which crossed the $266.6 billion (SR1 trillion) threshold in 2024.

This growth is driven partly by a 47% surge in fund subscribers, reaching over 1.72 million participants.

This underlines Saudi Arabia's ongoing rise as a key gateway for global and domestic asset managers and investors seeking to capitalize on the region's growth opportunities.

Moreover, the sukuk and debt instruments segment has emerged as a particular growth driver, expanding to $176.9 billion (SR663.5 billion) from $146.6 billion (SR549.8 billion ) in 2023.

This 20.6% uptick rate demonstrates an appetite for Sharia-compliant investment products.

Positive return expectations coupled with stable macroeconomic conditions and favorable growth prospects have spurred IPO activity in the Kingdom, which now leads the region in terms of the number and value of IPOs.

Currently, it accounts for 12 of 14 IPOs across the Middle East and North Africa in the first quarter of 2025, driving a 106% rise in regional proceeds to $2.1 billion.

Vision 2030 Accelerates Saudi Capital Market Transformation

These milestones reflect the Kingdom's relentless pursuit of a diversified, private sector-led economy in light of Vision 2030's roadmap.

Over the past five years, Saudi Arabia has raised approximately $274 billion through its capital markets, with $130 billion secured in US dollar-denominated issuances and $144 billion locally in Saudi riyals.

The Saudi Stock Exchange (Tadawul) has experienced a 40% increase in liquidity in 2024 compared to 2023.

With ongoing policy advancements, including easing ownership restrictions and streamlining investment procedures, the capital market is primed to boost Saudi Arabia's attraction to foreign investors and be a crucial pillar in its growth story.