Saudi Arabia’s capital markets set for sustained growth

May 8, 2014 8:33 am

Executives meeting for the 9th Euromoney Saudi Arabia Conference this week have been impressed by the confidence and optimism of the Kingdom’s financial sector.

Confidence is seen as one of the key elements for sustained economic growth, and speakers from both within the Kingdom and from international banks and financing groups have all expressed strong confidence during this week’s event.

On the second day, the tone was set by Adel Saleh Al-Ghamdi, Chief Executive Officer of the Saudi Stock Exchange (Tadawul), who outlined the dynamic factors supporting the growth of the Arab world’s largest exchange. The Tadawul is now the ninth largest emerging market stock exchange out of a basket of 24 exchanges in terms of market capitalization, and has the sixth highest liquidity.

“We see strong demand coming from within the Saudi Arabian economy,” said Al-Ghamdi. “There are currently 35 family-owned businesses in Saudi Arabia exploring their options for IPO with financial advisors at this time,” he added.

A morning session also saw senior executives from leading banks and enterprises, including Saudi Aramco, Manafea Holding Company, Amundi Asset Management, Saudi Kuwait Finance House Bahrain and HSBC Saudi Arabia take part in a major discussion on the direction and evolution of the Kingdom’s capital markets.

In the session about Potential Risks and Future Financial Crises, Robert Parker, Senior Adviser at Credit Suisse discussed the significant improvement of bank risk globally over the last 3 years and warned about real estate bubbles: “Real estate bubbles in Singapore, London, Switzerland and other countries are considered as big financial risks.” He commented: “Other financial risks include youth unemployment, large current account deficits in emerging markets, China’s economic slowdown and shadow banking.”

In addition, Parker identified 3 major geo-political risks that might lead to future financial crises, including the Russia-Ukraine conflict, the negotiations with Iran and the China-Korea-Japan triangle. In a recent report, Al Rajhi Capital noted that Tadawul is “ready for foreign investors,” thanks to a strong economy, robust banking system, institutions to manage foreign investment in equity markets, and a track record for managing banking liquidity.

The 9th Euromoney Saudi Arabia Conference is the longest-running, largest and most influential financial conference in the Kingdom. It has attracted around 1,300 pre-registrations from all over the region and the world.

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