RIYADH: Saudi Arabia’s banking sector dominated trading on the Kingdom’s stock exchange during the third quarter of 2024, accounting for a 15.14 percent market share, according to Tadawul’s recent report.
The banking industry contributed approximately SR67.5 billion ($18 billion) in transactions, surpassing the materials sector, which recorded SR60.2 billion, representing 13.50 percent of the market. The energy sector held a 9.12 percent share, with trading value reaching SR41.07 billion.
Al Rajhi Bank, the largest player in the sector, saw the second-highest trading activity at nearly SR22.7 billion, trailing only Aramco, which led with SR27.15 billion in trades.
In June, Al Rajhi Bank announced it had become a major target for foreign investors, with foreign ownership in its shares exceeding SR43 billion, or 13.2 percent of the total. This investment represents over 10 percent of total foreign investments in Saudi stocks, underscoring the bank’s significance.
Valued at SR320.4 billion, Al Rajhi Bank is the largest in the Middle East and Africa, and its shares have surged over 300 percent since the launch of Vision 2030 eight years ago. Its assets have nearly doubled, reflecting robust growth.
The bank’s strong performance is supported by high ratings from global financial institutions, benefiting from past economic cycles, including interest rate reductions. Higher interest rates, driven by the Saudi Central Bank’s alignment with the US Federal Reserve, have enhanced profitability through improved net interest margins, making bank stocks more attractive to investors.
Strong credit growth, particularly in corporate and real estate finance, supported by Vision 2030 projects, further boosted the sector’s appeal. Saudi banks also enjoyed improved asset quality, reflected by lower non-performing loans, which strengthened confidence in the sector’s stability.
The materials sector’s strong trading volume can largely be attributed to Saudi Arabia’s Vision 2030 program, which has spurred significant demand for building materials and industrial supplies to support the Kingdom’s extensive infrastructure and construction projects.
Foreign investment in Saudi stocks reached record levels by September, with over SR414.92 billion in ownership, up from SR365.91 billion in the same period last year. Tadawul has focused on improving market function and efficiency through measures such as corporate governance enhancements, increased transparency, and greater liquidity.
Foreign investors, facilitated by programs like the Qualified Foreign Investor program, now have streamlined access to the Saudi market. Saudi Arabia’s inclusion in global indices like MSCI and FTSE Russell has further amplified investor interest.
In the third quarter of 2024, Red Sea International Co. emerged as the top gainer on the Tadawul All-Share Index, with a price appreciation of 133.16 percent. Albaha Investment and Development Co. followed closely with an 83.3 percent increase, and Sasco rounded out the top three with a 62.93 percent gain.
The overall performance of the Tadawul index reflected this bullish trend, with the market concluding the third quarter with a 4.67 percent increase, closing at 12,226.10.
