Tadawul ends 2018 on a high as the year proved tumultuous for most global equity markets

Saudi Arabia’s Tadawul, the Arab world’s biggest stock market, rose more than 8 per cent in 2018, pushing its market capitalisation just a notch under half a trillion dollars, in one of the most tumultuous years for most of the regional and global equities markets.

The benchmark Tadawul All Share Index climbed 600.41 points to reach 7,826.73 on the last day of 2018, lower than the highest closing of the year achieved in July at 8,490.75 points, as volatility in oil prices towards the latter half of the year, with crude losing 40 per cent of its value since October, dented investors’ confidence. The total market capitalisation at the end of the year reached 1.86 trillion Saudi riyals (Dh1.82tn), a 10 per cent year-on-year jump, the Riyadh-based bourse said in its annual performance report on Wednesday.

The total value of shares traded on the exchange last year reached 870.87 billion riyals from 836.28bn riyals at the end of 2017, while the aggregate volume for the period was 37.82bn shares compared to 43.30bn shares traded during the previous year, a drop of 12.7 per cent.

In terms of individual stocks, developer Dar Al Arkan led the market with the total number of transactions, followed by Alinma Bank and Sabic.

Sabic led the market in terms of the value of shares traded last year at 130.37bn riyals. The two other most active stocks were Alinma Bank and Dar Al Arkan, which posted values of 111.36bn riyals 75.96bn riyals, respectively.

Stock exchanges usually earn revenues through commissions and fees and income varies with the value and volumes of trade in the market. The Saudi bourse, which is preparing for its own initial public offering - the second Arabian Gulf exchange to do so after the Dubai Financial Market - does not report its profit.

Last year proved a choppy one for most global markets. The S&P 500 and the Nasdaq Composite, along with Dow, slid amid traded war worries, a slowing global economy and ongoing political turmoil in Washington. But the S&P 500 advanced on the last session of the year - amid the worst December rout for the benchmark since 1931 - by 9.2 per cent. That monthly rout added to the overall 6.2 per cent slide in the year.

Bear markets in equities from Japan to Germany were also witnessed. Europe’s main stock gauge, Stoxx Europe 600, fell 13 per cent in the year - the biggest fall since 2008.

The Saudi bourse, owned by the kingdom’s Public Investment Fund, its sovereign wealth fund, was last year granted emerging market status by global index providers FTSE Russell and MSCI, whose benchmark gauges are tracked by investors managing trillions of dollars in assets. Tadawul expects to attract tens of billions of dollars in passive flows to the bourse on top of the actively managed funds pouring investments into selected Riyadh-listed companies as the phased inclusion into emerging markets gauges is completed this year.

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Read more:

FTSE upgrades Saudi Arabia to emerging market status

Saudi Arabia expected to be included in FTSE Russell EM Index

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The Saudi government, which is still firmly committed to its privatisation agenda, is also going to give Tadawul a boost in 2019. The crown prince Mohammad Bin Salman last year told Bloomberg the government intends to privatise more than 20 companies early this year. Riyadh is also prioritising the merger of its oil interests ahead of the anticipated public flotation of Aramco, billed to be the biggest-ever in the world, on the back of Aramco’s plans to acquire a majority stake in petrochemical company Sabic. An IPO of the combined entities makes sense and, despite market speculation, could happen late 2020, early 2021, according to the crown prince.

In 2018, nine companies or funds offered parts of their shares in initial public offerings, pushing the total number of Tadawul-listed companies to 190. The total offered value for all IPOs last year reached 4.21bn riyals, according to Tadawul's report.