Saudi Arabia’s Tadawul launches index to track top 50 companies

Stocks in the new index comprise companies that cover 90 per cent of Tadawul’s free float market cap

The exchange board at the Tadawul bourse in Riyadh, where a new index has been established AFP

Saudi Arabia's Tadawul stock exchange has launched a new index that tracks the top 50 companies ranked by their market value on the Arab world’s biggest bourse.

The TASI 50 index comprises companies that cover 90 per cent of Tadawul’s free float market cap with a minimum annual traded value ratio of 5 per cent, the bourse said in a statement on its website on Sunday.

The ratio signifies the proportion of the total stock value traded annually, ensuring the companies included in the index are actively traded and not illiquid or rarely transacted.

The index, which can be used as a benchmark for exchange-traded funds (ETFs), futures and options, is a “comprehensive representation of the largest companies in the market”, Tadawul said.

"This index offers a benchmark for investment products, allowing investors to track and benchmark performance based on specific criteria," said Mohammed Al Rumaih, chief executive of the Saudi Exchange.

"With this index, both local and foreign investors can access a diverse range of investment opportunities in our dynamic and growing capital market," he added.

Saudi Arabia, the Arab world's biggest economy, has introduced a series of measures to attract international investors as part of efforts to draw foreign investment, diversify the economy and reduce its reliance on oil.

Tadawul, which is among the top 10 global stock markets, became the third publicly traded regional stock exchange after the Dubai Financial Market and Boursa Kuwait when it was listed in December 2021.

“The launch of the TASI 50 Index is a significant milestone towards the achievement of the Financial Sector Development Programme of Saudi Vision 2030,” Tadawul said.

The kingdom and the wider GCC region have had a flurry of initial public offerings amid strong investor demand as economies rebound at a quicker pace from the coronavirus pandemic-induced slowdown and liquidity has been shored up by high oil prices.

The volume of IPOs on bourses in the Mena region rose by 44 per cent annually in the second quarter of 2023 amid robust economic growth, according to global consultancy EY.

Growth in Mena IPO deals was driven by Saudi Arabia and the UAE, the top two regional economies, EY said in a September report.

The number of listings rose to 13 in the three months to the end of June.

Last month, regional broadcaster MBC Group raised 831 million Saudi riyals ($222 million) in an IPO after pricing it at the top of the range.

The company set the final offering price at 25 riyals a share, for its offering of a 10 per cent stake amid “robust investor demand”. The pricing valued the group at 8.3 billion riyals.