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Capital Markets

Fund managers set their investment sights on Saudi stock markets

It's not all about oil. There are plenty of other highly rated companies to invest in.

The first thing that always surprises new potential investors in Saudi Arabia is that, not only is it not all about oil, it is actually very hard to get exposure to oil stocks. Petrochemicals are a different matter, but even then, they’re hardly dominant. “Around 170 companies are listed on the Tadawul, of which only 14 belong to the petrochemical sector,” says Gaurav Shah, CEO of Al Rajhi Capital. “The Tadawul has 15 sector indices, which says much about the diversity of the market.”

PE ratios of Saudi Arabia, GCC (ex Saudi Arabia) and global emerging markets index

Saudi Arabia and GCC ex Saudi Arabia: value traded
Saudi Stock Exchange (Tadawul)

Global EM free-float market cap industry weightings

Saudi Arabia market: Free-float market cap

In terms of regional scale, there is plenty outside of resources and petrochems. Al Rajhi and newly-listed NCB are among the biggest banks in the Middle East, Saudi Telecom one of the biggest telcos, and Almarai one of the largest integrated dairy companies in the world, never mind the region. In materials, even if oil is little represented in listed stocks, Maaden has exposure to gold, phosphate and aluminium.

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