Saudi Arabia’s stock exchange, known colloquially as the Tadawul, is beginning to strike a chord among international investors. This stems largely from the market’s commitment to greater openness and plurality, thereby transforming a space that has for so long been closed off to any outside involvement.

As western imaginations are captured, however, it is important to view the prospective opportunities in context; and this begins with gaining a clear picture of where the Tadawul stands in contemporary Saudi. Shadow Governance Intel considers those it is beholden to, along with the informal forces that surround it.

Key Points

  • Capital markets are being primed in Saudi Arabia to accommodate increasing investment, from foreign as well as local entities. Growth of the private sector is being treated as a priority at all levels, no longer just the level of billion dollar investments that institutional investors are capable of making.
  • As legal changes begin to bear fruit, the political agenda underpinning the stock market’s liberalisation should be noted. The Tadawul is a tool being leveraged to transform the Saudi economy, which means that it will subsequently be defined by high levels of political exposure over the medium term.
  • Investors who remain unfamiliar with the emerging political dynamics may find that a purely commercial lens will not be sufficient to operate successfully in Saudi Arabia.