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Market analysis: Saudi Arabia

30 March 2009

Removing mystery to realise returns

Saudi Arabia has traditionally been known for one thing – oil.  And rightly so, the market is the world's dominant oil producer sitting on more than 25% of the world's known reserves. But the market has more to offer than just oil. Saudi has been taking steps to build out its capital markets, although slowly.

To be clear, Saudi Arabia is an emerging market with great promise and opportunity. But it has a relatively young capital market. There is no derivative market,  securities lending market, or hedge fund market. 

Saudi Arabia has had an equity market for almost 20 years, but it did not get any legs until 2003. The impetus for this was the market's first privatisation in a while for Saudi Telecom. This was a landmark transaction of $4.08 billion. This deal kick started a broad distribution of equity to the local market. This was the start of the...