Speaking at the launching ceremony, Fahd Al-Mubarak, chairman of Tadawul, described the Saudi bourse as the largest in the region in terms of market capitalization and exchange value, adding that it offers a wide variety of products and services to investors. “ETFs are a new product that allows investors to avail of the benefits of both stocks and investment funds,” Al-Mubarak told the ceremony, which was attended by Abdul Rahman Al-Tuwaijri, chairman of the Capital Market Authority (CMA).

He said the ETFs that enjoy a variety of assets are less risky compared to other funds. “They can be traded at the same time of stock exchange, using the same methodology.” Another distinction is that they are is continuously reviewed by the fund manager.

Al-Mubarak said Falcom 30 was launched after receiving approval from the CMA and after conducting a number of workshops.

Adeeb Al-Suwailem, CEO of Falcom Financial Services, said ETFs would be traded in the market during the time of stock exchange. He said ETFs make investments in any sector secure and profitable.

Falcom 30 was trading flat on its debut on Sunday. However, the Tadawul All-Share Index (TASI) fell 0.09 percent to close at 6,795.75 points.

“ETF is a way for foreign investors to participate in the Saudi stock market in a quick and cost effective way. There is appetite on the Saudi stock market, no doubt and as there is greater depth and value being created, there will be more interest. Value creations among Saudi corporates is very important as they become the magnet of attraction,” said John Sfakianakis, group general manager and chief economist at Banque Saudi Fransi.

“There is no doubt that thanks to a host of government policies and action taken, Saudi Arabia has managed to ride out quite well the global economic downturn. Regulation is on the right track and if anything, Saudi Arabia is making steadfast progress compared to other parts of the region,” Sfakianakis said.

The ETF enables investors to gain broad exposure to the Saudi market and specific sectors (like petrochemicals, banks). Looking at the composition, Petrochems make up 40 percent of the ETF, followed by banks (23.5 percent), telecoms (11.9 percent) and cement (5.9 percent). Together, these four sectors are about 81.27 percent of the ETF. Investors should be aware that like stocks, this investment is subject to market risk and fluctuates in value, said a Riyadh-based market analyst who preferred anonymity.