Saudi Capital Market Continues To Set Annual Records In 2023

The Capital Market Authority (CMA) released its 2023 annual report, showcasing notable advancements and record achievements in regulatory, legislative, developmental, and investment sectors. The CMA approved a new regulation and amended four others. The Council of Ministers also approved the Real Estate Contributions Law to enhance capital market legislation.

Foreign investment in the Saudi capital market reached unprecedented levels in 2023. Net foreign investments hit SAR 198 billion, a 7.7% increase from 2022. Foreign investor ownership rose to SAR 401 billion by the end of the year.

The CMA's report highlighted significant progress in the sukuk and debt instruments market. The Debt Market Development Strategy was adopted, and the Authority's share of trading commissions on sukuk and bonds was cancelled to boost secondary market activities and liquidity.

The size of the sukuk and debt instruments market grew to 18.3% of GDP by the end of 2023. Seventy sukuk and debt instruments were listed, raising SAR 29.95 billion, with SAR 29.85 billion from private placements and SAR 100 million from public offerings.

The number of offerings and listings in the Saudi capital market surged to 43 in 2023, a 79% increase from target listings for that year. This included seven public offerings in the main market, 29 company listings in the parallel market, six direct listings in the parallel market, and one traded real estate fund listing.

Regulatory Enhancements

CMA made several regulatory changes last year. These included approving Rules for Foreign Investment in Securities and amending regulations like Implementing Regulations of Companies Law for Listed Joint Stock Companies, Capital Market Institutions Regulations, Instructions for Company Announcements, and Investment Accounts Instructions.

In collaboration with the Real Estate General Authority (REGA), the Real Estate Contributions Law received approval from the Council of Ministers. This law aims to further develop legislation governing real estate contributions.

Inspection and Compliance

CMA conducted inspections as part of its responsibilities. Thirty-seven permits were inspected: 23 routine inspections and 14 cause inspections. Investigations into suspicious trading activities rose by 18.6%, from 859 cases in 2022 to 1019 cases in 2023.

This led to seven suspected violations and 59 regulatory inquiries. CMA received a total of 7,025 complaints last year; it settled 5,056 complaints while directing another 1,047 complainants to the Committee for Resolution of Securities Disputes (CRSD). Additionally, there are still 855 complaints under review.

Investor Protection

CMA resolved 146 cases related to investor protection last year. It executed 179 sanction decisions against violators of Capital Market Law (CML) regulations. Furthermore, final decisions by CRSD resulted in compensating 579 investors with over SAR 245 million.

The total fines and financial penalties issued by CMA and CRSD amounted to SAR 1.395 billion; SAR 375.35 million were collected from these penalties.

Global Financial Rankings

Saudi Arabia achieved top positions in several global financial market indicators due to these efforts. It ranked first among G20 countries in the Board of Directors Index and second in indices like Ease of Access to Financial Markets, Stock Market Capitalization, Shareholder Rights, and Venture Capital.

The IMD World Competitiveness Yearbook noted that Saudi Arabia improved its ranking in six out of twelve financial market indicators compared to last year while maintaining its position in two indicators.

Strategic Achievements

CMA Chairman Mohammed Elkuwaiz praised these accomplishments while highlighting ongoing efforts with partners under the Financial Sector Development Program (FSDP). He noted that CMA completed its strategic plan for years 2021-2023 successfully surpassing targets in nine out of thirteen strategic indicators while meeting targets in two others.

CMA is preparing a new strategic plan aligned with Saudi Vision 2030 upon approval by its Board aiming at further development towards making Saudi capital markets globally competitive.

With inputs from SPA