DUBAI: Khalid Al-Hussan seemed to be enjoying himself last Thursday at the Riyadh headquarters of Tadawul, the Saudi Arabia stock exchange, of which he is chief executive. In fact, a quiet smile of satisfaction rarely left his face, even under the bright glare of the television lights of the international media.
“We’ve all worked very hard and we’re very pleased,” he told Arab News once the TV cameras had left, adding that it had been “one of the best days” of his professional career.
Al-Hussan had just left the podium of a press conference — shared with Tadawul chairperson Sarah Al-Suhaimi and the chairman of the Capital Markets Authority, Mohammed Al-Kuwaiz — to announce the fact that, after three years of preparation, Saudi Arabia had finally been included in MSCI’s Emerging Markets index.
It was actually more of a celebration than an announcement. MSCI had broken the news some hours earlier that Saudi Arabia was to be classed as an emerging market (EM), rather than a frontier market, putting the Kingdom on the radar of international investors in a big way. All three of the market dignitaries were in effusive mood, gratefully accepting multiple “mabrouks” from the media pack.
The move by MSCI, it is estimated, will pull in as much as $45 billion in foreign investment to the Saudi exchange; that figure could rise sharply if the Saudi Aramco listing goes ahead on the bourse. That is a huge boost for a market with a current market capitalization of about $520 billion.
It has already been quite a year for the Tadawul chief, with a lot of the hard work of his previous three years in the job paying off handsomely. In March, another international index compiler, FTSE Russell, had also upgraded Saudi to emerging market status, and there have been launches and bolt-ons of other services essential for a modern stock market, such as a central clearing system.
Perhaps most importantly of all, the Tadawul has been one of the best-performing markets in the world in 2018, with a 13 percent rise in the first six months. “It has been one of the best years, rather than just a good day today,” Al-Hussan said.
“MSCI inclusion is a reflection of how our reforms have been widely accepted, by local and international markets. It was designed as a plan to achieve what we have today,” he added.
The Riyadh exchange has always been the biggest in the Arabian Gulf region, but since 2015 it has been transformed into one of the most modern and efficient too.
New, internationally recognized settlement systems have been introduced, governance systems upgraded, and foreign investors welcomed. The status upgrades by global investing organizations — there is another due from S&P before the end of the year — are the logical end of all this work.
It has not been without its challenges, Al-Hussan remarked. “To balance the needs of international and local investors was sometimes a challenge, especially in the move to new settlements systems. But if you understand the market, and know where you’re trying to get to, it’s possible to get both of them working together,” he said.
There is another challenge, which in some ways the MSCI upgrade is designed to overcome: the nature of share trading and stock markets within the broader economic context of Saudi Arabia and the Arabian Gulf. It is an issue of the perception of the region in the world as much as anything else.
While analysts generally welcomed news of the MSCI upgrade, some delivered the opinion that inclusion in international indices was not in itself so significant for regional markets, and the Saudi market in particular.
Other factors ultimately determined the health and appeal of Gulf markets, the theory went, in a part of the world where the oil price is the single most important economic factor, and regional geopolitical events color global investors’ overall views. Foreign confidence in Saudi Arabia was also hesitant, given the sheer pace of the change going on in the Kingdom under the Vision 2030 strategy, it had been argued.
It is a line Al-Hussan has heard before, and he has a ready answer. “I disagree that MSCI inclusion is less important than these other factors. It is a sign of the confidence of international investors in the Saudi market, and a reflection of how confident they feel here,” he said.
“The new cash that we can expect from international investors — around $40 billion — is not small or insignificant, and these people will not take risks lightly. The people at MSCI are pretty intelligent too. They have never moved a country from the watchlist to full EM status so fast — in just 12 months — so that tells you about their confidence, and the confidence of their clients, in Saudi Arabia,” he added.
And, finally, there is the clinching argument that non-market factors can always have a profound effect on financial markets, and not just in Saudi Arabia or the Gulf countries. “Economic and geopolitical factors could have an effect on markets anywhere in the world, not just here,” he said.
An engineer by training, Al-Hussan was educated in the US to MBA standard, and qualified as a certified entrepreneur from the University of Colorado. His previous career in the insurance industry made him aware of the need to weigh risk; 10 years at Tadawul — working across virtually all its functions from business development to strategy and operations before becoming CEO — has seen him apply those lessons in the context of financial markets.
There is a lot more to do, Al-Hussan insisted. “Our plans never end. I’m more excited about what’s to come as we continue to enhance the market’s future” he said, before outlining the strategy to launch a full national clearing system that would enable Tadawul to launch derivatives trading platforms by the end of 2020 in a staged process.
There is also the plan to enhance the market-making function, so that traders can operate to international best practice standards by the end of this year. “There is already a model in place, but it will be perfected to global standards by the end of the year,” he said, rejecting suggestions that the innovations at the Tadawul might encourage the inflow of speculative “hot money” into the Kingdom.
All this reform and improvement is desirable in itself, of course, and for the good of the Kingdom’s financial markets. But there is a big goal in sight that Al-Hussan and Tadawul are aware they must keep in focus: the historic initial public offering of Saudi Aramco, as well as the other multibillion-dollar privatizations that are planned under the Vision 2030 plan.
“Of course, there is Aramco,” he said as he contemplated the list of tasks ahead. The IPO of the biggest oil company in the world is the centerpiece of the Kingdom’s plans to transform its economy away from oil dependency, and Tadawul has been designated the “home market” for the IPO.
The biggest stock exchanges in the world — New York, London, Hong Kong — have all been mentioned as possible venues for Aramco, but it is certain that Tadawul will also play a big part in the sell-off.
Al-Hussan caused quite a stir at last year’s Future Investment Initiative in Riyadh when he declared his “aspiration” to stage the IPO exclusively on Tadawul. He has since repeated his confidence that the Saudi exchange could handle the whole issue, which could be worth as much as $100 billion.
“Of course, I would like to have all of it, but that is a decision for Aramco and for its shareholder, the government. We will support whatever decision they reach,” he said. He also confirmed that Aramco would not have to wait until the MSCI upgrade — coming into force in two stages from May of next of year — is fully implemented. “We will be ready for it as soon as the decision on the IPO is made,” he said.
If the government did decide to put the whole of the Aramco IPO on Tadawul, it would change the character of the exchange completely, and alter MSCI’s calculations significantly.
MSCI awarded Tadawul a weighting of 2.6 percent of its global EM market, but that would increase enormously if Aramco were included. Al-Hussan agreed it could double the amount of funds flowing into the Saudi Arabian market.
It could also tie the fortunes of the Tadawul to the global oil industry in a way it is not now, by making it dominated by the biggest energy company in the world. Part of his philosophy has been to make the Tadawul — where banks and heavy industrial companies play a dominant role — more attractive to other sectors and more reflective of the changing national economy.
“We still aspire to do it. It would be a challenge, of course, but I think over the past three years, and with the upgrades, we’ve shown that we meet challenges,” he said.
After MSCI upgrade, Tadawul chief turns to the next challenge for Saudi Arabia
After MSCI upgrade, Tadawul chief turns to the next challenge for Saudi Arabia
BNPL emerges as the preferred payment option for Saudi consumers
RIYADH: The fintech landscape in Saudi Arabia is rapidly transforming daily financial practices, with buy now, pay later services gaining significant popularity. This shift is simplifying access to flexible payment options, reshaping how people manage their finances and make purchases across the nation.
According to a recent report from leading BNPL provider Tabby, 77 percent of Saudi consumers now use BNPL for essential purchases.
Data from Tabby shows that first-time BNPL transactions are twice as likely to be for necessary items rather than discretionary ones, with education and medical expenses at the forefront. This indicates that a large portion of BNPL usage is dedicated to essential transactions rather than non-essential wants.
Tabby’s data also reveals that the average value of essential purchases made through BNPL is higher than that of discretionary spending. This suggests that while consumers are prioritizing needs, BNPL offers an accessible and affordable way to purchase high-value necessities, such as insurance and home goods.
Impact of BNPL
By allowing payments to be spread over an extended period, BNPL has revolutionized shopping habits. Not only does it provide consumers with more control over their finances, but it also alters their relationship with businesses.
In an interview with Arab News, Tarabut CEO Abdulla Al-Moayed explained that the rise of BNPL among Saudi consumers can be attributed to several factors.
“BNPL’s interest-free installment structure makes it an attractive and Shariah-compliant payment option for many Saudi consumers — a positive shift from traditional credit cards or loans,” he said.
“Because BNPL offers a low-barrier alternative to traditional credit, it doesn’t require a high credit score or lengthy approval process, making it accessible to a wider population, particularly younger and lower-income individuals. The ease of using BNPL through mobile apps and online platforms also aligns well with a generation that values convenience and speed,” Al-Moayed added.
He also pointed out that the supportive regulatory environment in Saudi Arabia has fueled the rapid growth of fintech solutions, leading to the emergence of various local BNPL providers. This increased competition has ultimately led to better services and offerings for consumers.
Arjun Vir Singh, partner and global head of fintech at business intelligence firm Arthur D. Little, offered another perspective on the surge in BNPL adoption. He noted that the e-commerce boom, accelerated by COVID-19, has significantly driven the growth of BNPL among consumers. Singh also emphasized the growing convergence of online and offline shopping experiences.
“As customers’ journeys and payment methods in-store and offline become increasingly digital, we expect BNPL adoption to expand into this segment as well,” he said.
Singh further explained that digital payments, seamless integration, merchant sponsorship, and the rising cost of living have all contributed to BNPL’s rapid growth.
BNPL vs. traditional credit
Singh noted that BNPL is beginning to disrupt traditional credit models in consumer finance, a trend that is expected to expand as BNPL adoption spreads across sectors like travel, real estate, and automotive. “Arguably, the biggest impact will come if BNPL successfully expands into the B2B credit and financing segment,” he stated.
Singh also highlighted that banks and credit card companies are already responding to the rise of BNPL by adjusting their consumer finance offerings. Many are now partnering with BNPL providers or collaborating with major players like Visa and Mastercard, which are concerned about losing consumer spending. Some banks are even developing their own flexible payment solutions that mimic the BNPL model.
For Al-Moayed, the simplicity, transparency, and digitalization of consumer credit will force traditional credit models to adapt.
“Traditional credit models that rely on rigorous background checks and higher entry barriers need to evolve quickly while still managing risk effectively, in order to appeal to a broader consumer base and offer more flexible, secure, and customer-friendly credit options,” he said.
He also emphasized the role of Open Banking in this evolution, saying it could revolutionize credit risk management by utilizing real-time and historical behavioral data. “Open Banking has the potential to make a significant impact by giving lenders more agile and secure access to data, enabling personalized credit solutions,” Al-Moayed added.
As BNPL expands consumer spending power, he believes that as the market matures, empowered consumers will become more financially literate, leading to better-informed financial decisions.
“Open Banking will help by providing enriched data to improve insights into consumers’ financial health, preventing unsustainable debt,” he said.
Al-Moayed also pointed out that early adopters of Open Banking will gain a competitive edge by providing more intelligent financial services, better user experiences, and faster, more affordable options for all consumers.
Singh concurs, noting that as traditional players adjust to the changing landscape, innovation in consumer finance will continue to flourish. “This shift includes segmenting customers based on different criteria, using alternative data to enhance credit models, and adapting models to the nature of the spend. Innovation is also extending to customer service, not just credit models,” Singh said.
Merchants and BNPL
“Retailers have been the greatest sponsors of BNPL, helping to legitimize and drive the growth of e-commerce,” said Singh. This was initially true for e-commerce platforms, but as more retail experiences shift online, BNPL adoption among merchants has grown exponentially. “The adoption of digital payment solutions across all retail models is driving BNPL growth,” Singh added.
Arthur D. Little’s proprietary research has shown that merchants are seeing substantial benefits from BNPL, including increased average transaction values, more frequent purchases, access to new customers, and lower customer acquisition costs. Merchants also enjoy a differentiated offering compared to their competitors.
Al-Moayed agrees that BNPL offers numerous advantages for merchants but suggests that more value could be unlocked by leveraging the data collected on consumer behavior and spending patterns. “Merchants should explore how to use this valuable data to offer personalized promotions or product recommendations,” he said.
“Hyper-personalized sales and marketing will be key to increasing customer engagement and loyalty. This will soon be expected across the Kingdom’s retail market,” Al-Moayed added.
The future of BNPL
“Over the next few years, BNPL services will become even more integrated into the broader financial ecosystem, using Open Banking to enhance personalization and accessibility,” said Al-Moayed.
He also foresees the global adoption of big data and artificial intelligence further enhancing the BNPL customer experience. “We may see BNPL providers developing educational tools to help consumers manage their financial health effectively while using these services,” he added.
Singh, however, envisions a different future for BNPL. “BNPL will expand into the B2B segment, particularly as a tool to service underserved micro and small businesses,” he said.
Singh also predicts that AI, enhanced regulations, and market consolidation will all play crucial roles in BNPL’s future growth.
Saudi Arabia introduces new laws to streamline business registration and trade names
RIYADH: Saudi Arabia’s new regulations designed to streamline commercial registration and trade name processes have been described as a “game-changer” for entrepreneurs.
Approved in September, the laws are set to come into force in the coming weeks and aim to enhance business efficiency and improve the overall commercial environment.
Experts have told Arab News that the new regulations will help encourage small businesses, particularly those led by women — key components of the Kingdom’s Vision 2030 economic diversification strategy.
In the first quarter of 2024 alone, the trade sector saw 104,000 new commercial registrations, marking a 59 percent increase compared to the same period in 2023. The Ministry of Commerce also issued 65,363 permits during this time last year.
When the changes were announced, Minister of Commerce Majid bin Abdullah Al-Qasabi said they were designed to simplify business operations by offering a unified national registration system.
Ryan Al-Nesayan, partner at business intelligence firm Arthur D. Little, hailed these regulations as a “game-changer,” stating that by simplifying and speeding up the registration process, the new laws eliminate bureaucratic bottlenecks that previously slowed down business launches.
He told Arab News: “This is especially important for startups where every delay can cost momentum. Entrepreneurs can now get their ventures off the ground quickly, focusing on growth rather than navigating paperwork.”
Al-Nesayan noted that the sharp rise in business registrations is a clear indication that Saudi Arabia is becoming a magnet for entrepreneurial activity. He attributes this growth to the government’s focus on business-friendly reforms and Vision 2030 initiatives, which are creating a more streamlined business environment.
Notably, women received 44 percent of the new registrations in the first three months of 2024, underscoring a significant rise in female participation in the business world.
Al-Nesayan emphasized the importance of this statistic, pointing out that the new regulations are removing barriers that previously discouraged female entrepreneurs.
He added: “As the environment becomes more accessible, we’re likely to see continued growth in women-led businesses, which supports gender inclusivity in Saudi Arabia’s economic development.”
The introduction of these regulations brings the total number of commercial certificates issued across Saudi Arabia to over 1.45 million.
Jihad Chidiac, a Lebanon-based attorney, explained that the two new laws, the Commercial Registration Law and the Trade Names Law, are set to take effect 180 days after their publication in the official gazette, which is expected within the next few weeks.
These laws will fully replace older legislation, with the current Law of Commercial Register having been in effect since 1995 and the Trade Names Law issued in 1999.
According to Chidiac, the introduction of these two laws “comes in alignment with the recent legal reforms the Kingdom is undertaking, including the new Investment Law permitting full foreign ownership of companies, and the amendment of the Labor law, while having as the main goal the implementation of Vision 2030 and the attraction of foreign investments into the Kingdom.”
Chidiac further elaborated that the new Trade Names Law specifically enhances the legal protection of intellectual property, making it easier for businesses to reserve, transfer, and protect their trade names.
He noted that the new law “prohibits the registration of names similar to existing ones regardless of different business activities, and simplifies the transfer of trade name ownership without requiring the transfer of the entire business.”
This step, according to Chidiac, is aimed at reducing conflicts and enhancing fair competition by encouraging businesses to adopt unique, distinctive trade names.
The new laws also set guidelines for the resolution of disputes related to trade names and business registration.
Chidiac commented that the centralized electronic database for business and trade name registrations will reduce duplication, improve transparency, and promote uniformity across the Kingdom.
He explained that the improved registration processes and enhanced legal framework will likely prevent conflicts over similar trade names.
He also mentioned that Saudi Arabia’s legal system encourages alternative dispute resolution methods such as mediation and arbitration, which help reduce the burden on courts and offer flexible options for businesses involved in disputes.
According to Abdulrahman Al-Hussein, spokesperson for the Ministry of Commerce, the new system is based on international best practices.
Arthur D. Little’s Al-Nesayan agreed, noting that the adoption of international best practices in the new registration system will make Saudi Arabia a more attractive market for foreign investors.
He explained: “The unified national registration system is a major win for both local and foreign businesses. It removes the complexity of dealing with multiple agencies and provides a one-stop platform for all business-related registrations.”
This, he added, signals a more predictable and transparent operating environment, aligning with global standards and making market entry far smoother for international companies.
The reforms also provide enhanced trade name protection, which Al-Nesayan highlighted as crucial for businesses looking to scale both domestically and internationally.
“In today’s market, a business’s brand is often one of its most valuable assets,” he said. “By ensuring stronger protection for trade names, companies can confidently invest in their brand, knowing it’s secure. Over time, this will build consumer trust, enhance market presence, and support long-term growth.”
For those with existing sub-registers, a five-year grace period is being offered to either transfer or cancel their registrations. Chidiac pointed out that while this grace period offers flexibility, it also raises challenges for businesses regarding the company’s history and anteriority, particularly if they opt to cancel their sub-registers.
He explained that companies must carefully consider the potential impact on their business identity when making decisions during this transition phase.
Alongside these changes, the cabinet also approved a new real estate transaction tax system and other related measures. Chidiac explained that the new real estate law replaces the previous 15 percent VAT on real estate sales with a 5 percent tax on property ownership transfers.
He noted that this reform will not only ease the financial burden on businesses but also attract local and foreign investment into the real estate sector.
Certain transactions, such as inheritance distribution and charitable transfers, are exempt from this tax, which Chidiac believes will stimulate increased activity in the real estate market.
Al-Nesayan also highlighted the significance of this new real estate transaction tax system, noting that it complements the broader business reforms by promoting a more structured and transparent property market.
He explained that such transparency is essential as Saudi Arabia grows as a business hub, stabilizing property markets and supporting broader economic diversification efforts.
Chidiac added that legal counsel will play a crucial role in helping businesses navigate the transitional period for the new regulations, particularly regarding the five-year grace period for existing registrations.
He emphasized the need for businesses to stay informed and seek professional advice to ensure compliance with the updated regulations.
Al-Nesayan echoed this sentiment, advising businesses to engage with legal and business advisory services early on to fully benefit from the streamlined processes.
He added: “Being agile in adapting to these reforms will give businesses a significant competitive edge in this evolving landscape.”
Egypt central bank keeps overnight interest rates steady
CAIRO: Egypt’s central bank kept its overnight interest rates unchanged on Thursday, as expected, saying that while inflation was set to decelerate sharply in early 2025 it nonetheless remained high.
The bank’s monetary policy committee kept the lending rate at 28.25 percent and the deposit rate at 27.25 percent, it said in a statement.
The unanimous forecast in a Reuters poll of 12 analysts was that the committee would keep rates steady.
Egypt’s headline inflation dipped in November to 25.5 percent, its lowest since December 2022, and has been trending downwards from a record high of 38.0 percent in September 2023.
“Inflation is projected to ease substantially in 2025, as the cumulative impact of monetary policy tightening and favorable base effect materializes, with a notable decline in Q1 2025 and convergence to single digits by H2 2026,” the statement said.
It added that according to leading indicators, economic growth accelerated in the second half of 2024 from the 2.4 percent recorded in the second quarter.
“The committee judges that the current policy rates remain appropriate to maintain a tight monetary stance until a significant and sustained decline in inflation is achieved, and expectations are firmly anchored,” the statement said.
Oil Updates — prices set for weekly gain on China stimulus optimism
RIYADH: Oil prices were little changed on Friday but were set for a weekly rise amid optimism that economic stimulus efforts will prompt a recovery in China, but a stronger dollar capped gains, according to Reuters.
Brent crude futures fell 2 cents to $73.24 a barrel by 08:35 a.m. Saudi time. US West Texas Intermediate crude was at $69.61, down 1 cent, from Thursday’s close. However, on a weekly basis, Brent was up 0.4 percent and WTI rose 0.2 percent.
The World Bank on Thursday raised its forecast for China’s economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would keep weighing it down next year.
China, the world’s biggest oil importer, revised upwards its 2023 gross domestic product estimate by 2.7 percent, but also said the change would have little impact on growth this year.
Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, Reuters reported this week citing sources, as Beijing ramps up fiscal stimulus to revive a faltering economy.
However, a stronger US dollar weighed on oil prices and capped gains. The greenback has risen about 7 percent this quarter and remained pinned at a near two-year peak against major peers after the Federal Reserve signaled slower rate cuts in 2025.
A stronger dollar makes oil more expensive for holders of other currencies.
The latest weekly report on US inventories from the American Petroleum Institute industry group showed crude stocks fell last week by 3.2 million barrels, market sources said on Tuesday. API/S
Traders will be waiting to see if the official inventory report from the US Energy Information Administration confirms the decline. The EIA data is due at 9 p.m. Saudi time on Friday, later than normal because of the Christmas holiday.
Analysts in a Reuters poll expect crude inventories fell by about 1.9 million barrels in the week to Dec. 20, while gasoline and distillate inventories are seen falling by 1.1 million barrels and 0.3 million barrels respectively.
ROSHN launches first residential community in Makkah
JEDDAH: Saudi Arabia’s leading property developer, ROSHN, has officially launched its first residential community in Makkah, marking a significant milestone in the company’s efforts to improve the city’s living standards while supporting the national development goals outlined in Vision 2030.
The launch event for the Al-Manar Community project, which is ROSHN’s inaugural residential development in Makkah, took place under the patronage of Makkah Gov. Prince Khaled Al-Faisal. The groundbreaking ceremony was attended by a host of prominent figures, including Makkah Mayor Musaed bin Abdulaziz Al-Dawood, Royal Commission for Makkah and Holy Sites CEO Saleh bin Ibrahim Al-Rasheed, Real Estate General Authority CEO Abdullah Al-Hammad, and ROSHN’s acting CEO Khaled Jawhar. The event also saw participation from officials across both the public and private sectors.
Strategically positioned, the Al-Manar community is just a 20-minute drive from the Grand Mosque, less than an hour from King Abdulaziz International Airport in Jeddah, and only two minutes from Makkah’s western gateway. The development’s design thoughtfully integrates the region’s rich cultural and architectural heritage, blending modernity with tradition.
The Saudi government, under Vision 2030, has set ambitious targets to boost homeownership among citizens, aiming for 70 percent by the end of the decade.
ROSHN is playing a pivotal role in achieving this goal by developing large-scale residential projects that offer high-quality and affordable housing options for Saudi citizens. These initiatives are in line with the government’s strategy to expand the housing sector, elevate living standards, and provide homes for the country’s growing population.
At the ceremony, attendees were given a tour of model villas and previewed the diverse residential designs available within the community. The Al-Manar development will feature a variety of villas alongside essential amenities such as schools, mosques, shopping centers, healthcare facilities, open spaces, and recreational areas.
Khaled Jawhar, acting CEO of ROSHN, explained that the project spans over 21 million sq. meters and will provide more than 33,000 housing units. Additionally, it will offer more than 150 facilities designed to meet the needs of residents and support community well-being.
Saleh bin Ibrahim Al-Rasheed, CEO of the Royal Commission for Makkah and Holy Sites, emphasized the significance of the Al-Manar community as the first fully integrated ROSHN development in Makkah.
“Located at the city’s western gateway, within the Haram boundaries, this project reflects our commitment to facilitating impactful developments that drive long-term growth and sustainability,” Al-Rasheed said.
