Robust IPO pipeline and market initiatives propel Saudi Exchange’s global appeal: CEO

Robust IPO pipeline and market initiatives propel Saudi Exchange’s global appeal: CEO
Mohammed Al-Rumaih speaking at the Capital Market Forum — CONNECT Hong Kong.
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Updated 12 May 2024
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Robust IPO pipeline and market initiatives propel Saudi Exchange’s global appeal: CEO

Robust IPO pipeline and market initiatives propel Saudi Exchange’s global appeal: CEO

RIYADH: An array of robust and diverse initial public offerings are poised for the Saudi Exchange thanks to new initiatives aimed at attracting international investors, the bourse’s CEO has revealed.

Addressing a panel discussion themed “Expanding Frontiers: Uncovering Investment Potential in Saudi Arabia and China” at the Capital Market Forum — CONNECT Hong Kong, Mohammed Al-Rumaih expressed confidence in the future trajectory of the Saudi Exchange. 

"We can see a very healthy pipeline of IPOs, not just small or large ones, but across different sectors and cycles, tracing their journey from being private to going public," Al-Rumaih said. 

The CEO attributed this to the Saudi Exchange’s new measures aimed at attracting international investors. 

“We’ve been doing a lot of work in the past few years, major projects every year, to accommodate the needs of international investors and the asset managers,” he explained. 

These include the introduction of Market Making and the debut of Single Stock Options.  

In 2022, it launched a market-making framework for its stock and derivatives markets, aimed at enhancing liquidity and improving price determination efficiency. 

Al-Rumaih also highlighted the upcoming launch of the second phase of the Saudi Exchange’s post-trade development program, expected in the third quarter of 2024.  

Moreover, the CEO elaborated on Tadawul’s close collaboration with the Kingdom’s Capital Market Authority. 

“So, when it comes to technology, we have state-of-the-art infrastructure similar to global exchanges, but it’s not only about technology; there’s a major element which is the regulations. We’ve been working closely with regulators, particularly the CMA because they are leading the development of the capital market,” he stressed.  

In addition, Al-Rumaih also addressed how the Saudi Exchange views Hong Kong as an ally.

“We believe Hong Kong is a great partner for us. They’ve been doing a great job in the past few years, and I think they’ve established themselves as a destination for international investors looking to invest in Asia,” the CEO affirmed. 

“So, for us, as a country that is gearing up to become thriving economy and having the biggest stock market, or the biggest skeletal market, within that time zone, I think Hong Kong is a great partner to connect the Middle East with the East,” he underlined. 

Also speaking at the same panel, Loai Bafaqeeh, head of securities at SNB Capital, explained what the Kingdom is doing to encourage international investors. 

“With the market evolving and focusing on listing companies and bringing more and more companies to the market, I think what’s happening in Saudi in terms of encouraging international investors basically we are addressing some of the key fundamentals that international investors are looking for,” Bafaqeeh said. 

He added: “One thing, for instance, is the introduction of Market Making. Today, if you want to get an ETF or another product, or if you want to ensure good liquidity in the market, your first question should be: ‘Do you have a Market Making?’”

During the same panel discussion, Ding Chen, CEO of CSOP Asset Management Limited, talked about the emergence of the Kingdom as an investment prospect. 

“Saudi Arabia, the Kingdom, has already done a great job promoting itself and also bringing itself in the spotlight globally by providing quite a lot of conference and events; nowadays, a lot of people travel to Riyadh,” Chen underscored. 

“But we constantly do seminars and also do client educations with clients,” the CEO added. 

She went on to note that in order to provide Saudi Arabia with more opportunities and make it more appealing to regional investors, conducting massive education sessions for clients is crucial. 

“CSOP probably will do around 2,000 seminars annually, and we hope that through doing this continually client education, we can make more people know more about Saudi opportunities,” Chen concluded. 

Saudi Arabia’s Capital Market Forum aims to bolster connections with China’s capital markets by extending its reach beyond borders to host the event in Hong Kong. 

In 2023, the Saudi Exchange saw a significant influx of IPOs and listings, introducing various industries to the Main Market and the Nomu Parallel Market.

On the Main Market, nine IPOs raised SR11.6 billion ($3 billion), with an additional SR5.04 billion raised across nine further offerings. Meanwhile, the Nomu Parallel Market saw 27 IPO listings raising SR1.2 billion, along with six companies completing direct listings.

In April, the Saudi Exchange welcomed its 400th listing across all securities, underlining the growing prominence of the bourse in the capital market. 

As of March 27, the exchange had 216 securities listed on the Tadawul All Share Index, with the parallel market Nomu featuring 83 listings.


PIF signs MoU with FII to boost Saudi asset management sector 

PIF signs MoU with FII to boost Saudi asset management sector 
Updated 12 sec ago
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PIF signs MoU with FII to boost Saudi asset management sector 

PIF signs MoU with FII to boost Saudi asset management sector 

RIYADH: Saudi Arabia’s Public Investment Fund has inked a memorandum of understanding with the Future Investment Institute to strengthen the Kingdom’s asset management industry, making it a primary focus of future FII events. 

In a statement, PIF announced that upcoming FII events will feature its Asset Management Forum as a central component, elevating discussions and insights on both local and global stages. 

Held on the sidelines of the eighth FII event, this year’s Asset Management Forum drew over 300 prominent attendees, including fund managers, government officials, and representatives from sovereign wealth funds.  

“Strong and dynamic capital markets are an integral part of financing Saudi Arabia’s ambitious economic growth plans. PIF is committed to driving innovation and diversifying the range of investment products and initiatives to reshape the capital market,” said Abdulmajeed Alhagbani, head of Securities Investments at PIF. 

Topics at the 2024 forum covered the future of Saudi capital markets, the influence of artificial intelligence and digital transformation on portfolio management, and strategies for fostering emerging wealth managers in the Kingdom. 

“PIF is also keen to contribute effectively in attracting global asset managers and developing the capabilities of emerging local asset managers. This year we are also celebrating the graduation of the first cohort of trainees from PIF’s Portfolio Management Development Program,” he added. 

Earlier this month, a report by Fitch Ratings stated that Saudi Arabia’s asset management industry grew by 13.5 percent year on year by the end of the first half of 2024, surpassing $250 billion.  

The MoU with FII is expected to create new networking opportunities, connecting the Asset Management Forum with entrepreneurs, innovators, and thought leaders. 

Since 2018, assets managed by Capital Market Authority-licensed institutions in Saudi Arabia have doubled to reach SR800 billion ($213 billion). PIF has collaborated with asset managers to deliver diversified products to the market, the statement added. 

PIF signed additional MoUs at the FII event, including a notable agreement with Brookfield Asset Management to launch the Brookfield Middle East Partners platform — a private equity vehicle targeting investments in Saudi Arabia and the broader region. 

Further partnerships include MoUs with State Street Saudi Arabia Financial Solutions and Mizuho Financial Group Inc. to jointly develop new investment products, underscoring PIF’s strategy to enhance Saudi Arabia’s position in the global asset management landscape. 


HKEX expands footprint in Middle East with new Riyadh office

HKEX expands footprint in Middle East with new Riyadh office
Updated 3 min 43 sec ago
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HKEX expands footprint in Middle East with new Riyadh office

HKEX expands footprint in Middle East with new Riyadh office

RIYADH: Hong Kong Exchanges and Clearing Ltd. is expanding its presence in the Middle East with the opening of an office in Riyadh, highlighting the growing collaboration between Saudi Arabia and Hong Kong.

In an interview with Arab News at the Future Investment Initiative in Riyadh, HKEX CEO Bonnie Chan expressed her excitement about the new office, emphasizing its strategic importance in connecting Hong Kong’s global financial network with Saudi Arabia’s dynamic economic landscape.

“We’re extremely excited about the fact that we are opening an office here in Riyadh,” Chan said. “We are a global exchange, so it is in our DNA that we want to connect internationally. And when I say connect, what we would like to connect is really, capital with opportunities.”

Chan pointed out the potential she sees in the Saudi market after spending several days in Riyadh, noting that HKEX’s presence in the Kingdom will enable the exchange to seize these opportunities and build essential relationships.

“Having been in Riyadh for a few days, I can see a lot of opportunities around in this region,” she stated. “It makes sense for us to have a presence here so that we are in a better position to capture those and establish relationships. I think that is very important,” she said.

The decision to establish a foothold in Riyadh is part of a broader strategy that HKEX has been developing in recent years. According to Chan, the exchange began building connections with Saudi Arabia and the wider Gulf Cooperation Council region several years ago, culminating in key initiatives aimed at fostering mutual economic ties.

“We started actually developing the relationship with this region since a few years ago,” she said. “And we’ve done a few things, including signing an MoU with the Saudi Exchange. We have also been hosting events such as the FII Priority, last year in Hong Kong. Earlier this year, we also had the Capital Markets Forum.”

These interactions, Chan noted, were instrumental in the decision to open an office in Riyadh. “Through those events, I think we have already started developing relationships. And I think we have reached a point where we know that we need local presence, and that's why we are opening an office here,” she added.

Chan highlighted the goals outlined under Saudi Arabia’s Vision 2030, particularly the nation’s focus on economic diversification and green transition initiatives. “Over the last few days, I have met many people here. And I now have a better appreciation of what is really involved in this Vision 2030. There is a lot of need for diversification,” she observed. “And also, in a lot of the discussion in the last three days, there's a lot of talk about the whole green transitioning plan.”

The CEO believes HKEX is well-positioned to facilitate capital flows between Saudi Arabia and global markets, particularly China, which she described as a fertile ground for international investment. “Where we are, in Hong Kong, we’re very good at connecting,” she noted.

Chan emphasized that Hong Kong’s role as a “super connector” extends beyond facilitating foreign investments into China; it also aids Chinese investors in diversifying globally, with Saudi Arabia emerging as a prime destination.

“People on the mainland are very eager to diversify outside of opportunities domestically,” she explained. “And I think actually the Middle East, and Saudi Arabia could be a good destination. And therefore, from our perspective, what we would like to do is to help build that connection.”

Building familiarity among Hong Kong investors with Saudi companies has been central to this effort. Last year, HKEX introduced Asia’s first Saudi-focused exchange-traded fund, offering Hong Kong investors exposure to more than 50 prominent Saudi companies.

“I think this journey began last year, when we listed in Hong Kong the first Asia’s first ever and the world’s biggest Saudi underlying ETF in Hong Kong,” Chan explained.

“With this ETF, you basically provide the opportunity for investors in Hong Kong to get investment into basically these very exciting Saudi Arabian companies. Now, I think it is a very important step because you need investors to build up that familiarity,” she added.

This week, Chan noted, the Saudi exchange has reciprocated, with two Hong Kong-tracking ETFs listing on Tadawul, signaling a promising start to cross-border investment flows.

“This week we are seeing a reciprocation. Basically, two ETFs listed on the Tadawul, which tracks investment in Hong Kong-listed companies,” she said. “I’m very happy I learned from one of the people putting together the seesaw ETF yesterday that immediately that has become the most traded ETF on Tadawul yesterday as it opened for trading. And today there is another one which is the SAP Hang Seng Index.”

Looking to the future, Chan believes this growing familiarity and investor engagement will pave the way for deeper financial ties, potentially culminating in dual listings on HKEX and Tadawul.

“If you think about it, once this familiarity is built out, hopefully that’s going to create more interest,” she said. “Ultimately, from ETFs, we may even see companies actually seeking a listing in one another’s exchange,” Chan added.

The CEO elaborated on the collaborative areas outlined in HKEX’s MoU with Tadawul, including cross-listing, environmental, social, and governance initiatives, and financial technology.

“When we signed the MoU with Tadawul, we wanted to focus on three things. So first of all, it's cross-listing. The second one is ESG and related initiatives. And the third one is fintech,” she explained.

“So, since signing that MOU, we have continued our dialog. In fact, Tadawul was the first stop on this trip. You know, as soon as I landed in Saudi Arabia in Riyadh. I went and paid a visit to our friends at Tadawul,” she added.

HKEX has been steadily expanding its international footprint in recent years, beginning with its first office in Singapore, followed by New York and London. Riyadh is the latest addition, a step that Chan described as part of HKEX’s long-term strategy to solidify its role as a “super connector” in global finance.

Chan emphasized that the Riyadh office will play a crucial role in linking Saudi investors and corporates with opportunities in Asia. “My anticipation and plan once our Riyadh office has happened, is for the staff here to really reach out to both investors here as well as corporates here and see what they would like us to do to help them foster relationships with investors and corporates in our region in Asia,” she shared.

HKEX has demonstrated resilience as a financial exchange, recently achieving record trading volumes driven by heightened market activity. “For the first six months of this year, our average daily trading volume was about 106 billion HKD, which will be approximately $13 billion,” Chan stated. “However, we have a recent rally, and it happened around the end of September, early October. The rally was very good, very strong. So much so that we broke trading volume record three times in ten days.”

Looking ahead, Chan expects that HKEX’s expansion in Saudi Arabia will foster a two-way capital flow, benefiting both regions. “As we expand our operations here, as investors in this part of the world get more familiar with opportunities in our region, then we can serve that purpose of bringing the capital to really match the opportunities which are available,” she said.


Saudi Arabia strengthens carbon markets with new deal for climate action

Saudi Arabia strengthens carbon markets with new deal for climate action
Updated 13 min 54 sec ago
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Saudi Arabia strengthens carbon markets with new deal for climate action

Saudi Arabia strengthens carbon markets with new deal for climate action
  • Agreement will play in ensuring the carbon markets established in the Kingdom are transparent, robust, and credible
  • Saudi Arabia has set a net-zero emissions goal for 2060, adopting a circular carbon economy approach

JEDDAH: A memorandum of understanding between two key entities is set to boost Saudi Arabia’s carbon markets and support the Kingdom’s climate objectives.

The signing of the deal between Regional Voluntary Carbon Market Co. and the Clean Development Mechanism Designated National Authority was witnessed on Oct. 30 by the Kingdom’s Energy Minister Prince Abdulaziz bin Salman, and Yasir Al-Rumayyan, governor of the country’s Public Investment Fund, on the sidelines of the eighth edition of the Future Investment Initiative in Riyadh.

The pact was inked by RVCMC Chair Rania Nashar and CDMDNA Director of Technical Affairs Maria Al-Jishi, acknowledging the essential role the agreement will play in ensuring the carbon markets established in the Kingdom are transparent, robust, and credible, according to the Saudi Press Agency.

Climate change poses a significant challenge for Saudi Arabia, the Middle East, and the global community. Reducing emissions is a top priority for the Kingdom, and voluntary carbon markets are essential for achieving climate targets.

Saudi Arabia has set a net-zero emissions goal for 2060, adopting a circular carbon economy approach that emphasizes reducing, reusing, recycling, and removing carbon.

As part of the Saudi Green Initiative, the Kingdom aims to cut carbon emissions by 278 million tons annually by 2030 and to source 50 percent of its energy from renewable sources.

There is also a strong push to involve the private sector in environmental sustainability projects, particularly in renewable energy, waste management, and eco-friendly construction.

High-integrity carbon credits can help finance climate action by funding projects that reduce and remove carbon emissions, helping accelerate the transition to low-carbon and more sustainable economies worldwide.

The Kingdom has embarked on various initiatives to reduce its carbon footprint and diversify its economy beyond oil.

Mitigative efforts include ambitious targets of 44 million tons of carbon dioxide captured annually by 2035 and 2 million tons of CO2 seized and utilized daily to produce glycol, urea, and green methanol, as well as clean fuels, according to the 14th IEA-IEF-OPEC Symposium on Energy Outlooks.

RVCMC, a partnership between PIF and the Saudi Tadawul Group Holding Co., was established in October 2022 during the sixth edition of the FII Initiative in the Saudi capital.

Some eight months later, the company announced the successful auction of over 2.2 million tons of carbon credits in the largest-ever voluntary carbon credit auction, held in Nairobi, Kenya in June 2023.

The auction offered high-quality CORSIA-eligible and verra-registered carbon credits, enabling buyers operating in various industries to play their part in the global transition.


Cruise Saudi charts course for major expansion in Kingdom’s maritime industry

Cruise Saudi charts course for major expansion in Kingdom’s maritime industry
Updated 22 min 2 sec ago
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Cruise Saudi charts course for major expansion in Kingdom’s maritime industry

Cruise Saudi charts course for major expansion in Kingdom’s maritime industry

RIYADH:Public Investment Fund-owned Cruise Saudi is preparing for substantial growth in the Kingdom’s maritime tourism sector, announcing plans to launch a new cruise later this year.

Founded in 2021 to develop the necessary infrastructure and services for a comprehensive cruise market in Saudi Arabia, the company currently oversees three ports that have collectively welcomed over 370,000 guests from around the world.

In an interview with Arab News at the Future Investment Initiative in Riyadh, CEO Lars Clasen detailed the company’s strategy to advance the cruise industry within the Kingdom, revealing a clear roadmap for significant operational expansion by 2030.

“Ultimately, we plan to have 10 destinations available. We have four in development at this very moment. On top of the three we have operational right now, there are three further in the pipeline,” he said.

The company aims to attract 1.3 million passengers annually by 2035.

To support this growth, Cruise Saudi is developing additional ports, including a new island destination set to open soon. “We will very soon, also in December, open up an island which offers a wonderful beach and water sport activities exclusively to cruise guests,” Clasen announced.

He elaborated: “It’s an island, some 200 miles south of Jeddah in the Red Sea, and it’s exclusively developed for cruise guests. This will be our next destination, our fourth destination, which we will be offering.”

The upcoming cruise line, Aroya, will primarily target the Arabian market, focusing on guests from Saudi Arabia and neighboring Gulf Cooperation Council countries. “We have the tagline ‘Remarkably Arabian.’ Successful cruise lines target their product offerings and the guest experience to specific source markets.”

Aroya is designed to accommodate over 3,000 guests, positioning it as a premium mainstream option. In contrast, the ultra-luxury Aman at Sea will target a global audience.

Despite geopolitical challenges currently limiting cruise traffic to the Red Sea, Clasen remains optimistic about the industry’s recovery, stating: “Right now, cruise ships are not really visiting the Red Sea due to the geopolitical situation, but we hope that traffic will return very soon.”

Cruise Saudi is committed to developing essential infrastructure alongside its cruise offerings. Clasen emphasized the need for a comprehensive approach: “When I say cruise industry, it’s not just about (establishing) a cruise line; we are also developing ports, terminals, and shore excursions.”

He identified the cruise industry as a substantial global business opportunity, asserting: “The cruise industry is a fairly large industry worldwide.”

Clasen further highlighted the long-term nature of the cruise business, noting that the lifespan of a cruise vessel can extend up to 40 years. He revealed the significant investments necessary for launching a cruise line, estimating the cost of a new cruise ship at around $1 billion, or approximately SR4 billion.

In terms of job creation, Cruise Saudi has set ambitious targets, aiming to generate 50,000 direct and indirect jobs in the cruise sector by 2035.

He reiterated Cruise Saudi’s commitment to sustainability, stating that energy efficiency standards will guide the development of new terminals and vessels. “We put a lot of emphasis on sustainability. When developing a terminal, we do it according to the latest energy efficiency and sustainability standards and measures. When we order a cruise ship, we order a cruise ship with engine configuration that will help us get closer to net zero,” he added.

Looking ahead, Clasen expressed confidence in the company’s growth trajectory, hinting at future capital market opportunities. “We’re just getting started, and I won’t exclude that (tapping into the capital market). Definitely not. But it’s too early. First, we’d like to introduce our products to the market, gain some traction, and become commercially successful,” he concluded.


Saudi Aramco, Riyadh Air sign MoU to collaborate in low-carbon fuel supply, sustainability

Saudi Aramco, Riyadh Air sign MoU to collaborate in low-carbon fuel supply, sustainability
Updated 41 min 27 sec ago
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Saudi Aramco, Riyadh Air sign MoU to collaborate in low-carbon fuel supply, sustainability

Saudi Aramco, Riyadh Air sign MoU to collaborate in low-carbon fuel supply, sustainability

RIYADH: Saudi oil giant Aramco and Riyadh Air have paved the way for potential collaboration in areas such as low-carbon fuel supply and sustainability with a new agreement. 

The two parties signed the memorandum of understanding during the eighth edition of the Future Investment Initiative taking place in Riyadh from Oct. 29 — 31 to set the stage for future partnership in those fields of common interest, according to a statement.

This falls in line with the integrated energy and chemicals company’s commitment to recognizing the urgency of addressing climate change and the fact that it has made sustainability a cornerstone of its corporate strategy. 

The firm has set ambitious goals to reduce its greenhouse gas emissions by 50 percent by 2030 and achieve net zero by 2050.

It also aligns well with one of the strategic pillars of the Public Investment Fund subsidiary, which is becoming an environmental leader by being fully committed to applying the best global sustainability and safety practices in the aviation industry. 

“We are delighted by the prospect of exploring a wide variety of opportunities for collaboration between Aramco and Riyadh Air. Both companies have expressed a desire to adopt the latest technologies, elevate experiences, and contribute to sustainability objectives,” Aramco Executive Vice President of Products and Customers Yasser Mufti said. 

“Aramco’s work to develop lower-carbon fuels, its strong focus on digitalization, and its aviation experience, among other things, provide a strong platform for potential cooperation with Riyadh Air,” Mufti added. 

On Riyadh Air’s behalf, Adam Boukadida, chief financial officer, said: “Our partnership with Aramco aligns perfectly with our ambition to become a leading global airline committed to sustainability and low-carbon fuels.”

He added: “By leveraging Aramco’s expertise, we aim to improve our operational capabilities and provide outstanding experiences for our guests. Together, we can play a significant role in advancing the Kingdom’s environmental and economic objectives.” 

During the event, Aramco agreed to work with Vietnam Oil and Gas Group, known as PetroVietnam, in storage, supply, and trading across the companies’ energy and petrochemical segments. 

As for Riyadh Air, the airline also signed an agreement during the forum to purchase 60 Airbus A321neo single-aisle aircraft, as it plans to commence its operations in 2025.

Under the theme “Infinite Horizons: Investing Today, Shaping Tomorrow,” this year’s edition of FII facilitated discussions on how investments can drive a thriving and sustainable future, pushing the boundaries of what is possible for humanity.