RIYADH: Saudi Arabia’s NEOM gigaproject, a futuristic region being built in the desert, is a “generational investment” with a long timeline, the country’s investment minister told Reuters on Monday, adding that foreign investment will pick up pace.

“NEOM was not meant to be a two-year investable opportunity. If anybody expected NEOM to be foreign investment in two, three or five years, then they have gotten (it) wrong — it’s a generational investment,” Minister Khalid Al-Falih said on the sidelines of the World Investment Conference in Riyadh.

“The flywheel is starting and it will gain speed as we go forward, as some of the foundational assets come to the market,” he said.

The world’s top oil exporter has poured hundreds of billions of dollars into development projects through the Kingdom’s $925 billion sovereign fund, the Public Investment Fund, as it undergoes an economic agenda dubbed Vision 2030 to cut dependence on fossil fuels.

NEOM, a Red Sea urban and industrial development nearly the size of Belgium that is meant to eventually house 9 million people, is central to Vision 2030.

NEOM announced this month its long-time chief executive, Nadhmi Al-Nasr, had stepped down, without giving further details.

Asked what effect the departure would have on investors, the minister said the executive had done “a respectable job” but that “there is a time for everybody to pass on the baton.”

Asked if PIF will continue to do much of the spending on NEOM until more foreign funds come in, Al-Falih said it was not binary.

“I think foreign investors are starting to come to NEOM, they’re starting to channel capital. Some of the projects that the PIF will be doing will be financed through global capital pools, through some alternative and private capital. That’s taking place as we speak,” he said.

“So I urge you not to look at NEOM as being 100 percent PIF and then suddenly there will be a cliff and it will go private.”

Saudi Arabia, which is racing to attract $100 billion in annual foreign direct investment by the turn of the decade — reaching about a quarter of that in 2023 — has recently seen more co-investment deals between state entities and foreign investors.

“It’s always been the intent,” Al-Falih said of foreign inflows alongside state funds.

He noted that foreign investors were at times “still looking, still examining, still sometimes questioning,” but that now there was confidence in the profitability of investment opportunities and that “the risk-return trade-offs are very, very fair and positive to them.” 

RIYADH: Saudi Arabia’s capital markets are on track for substantial growth following the successful rollout of the second phase of the post-trade transformation enhancements by the Saudi Tadawul Group.

This latest phase, which includes upgrades across key subsidiaries — the Saudi Exchange, the Securities Clearing Center (Muqassa), and the Securities Depository Center (Edaa)—marks a significant milestone in the ongoing efforts to expand investment opportunities and bring the market in line with international standards.

Building on the first phase completed in 2022, these enhancements represent the largest transformation of the Saudi capital market to date. The upgrades are designed to broaden access to a wide range of financial instruments, improve market efficiency, and reduce systemic risks.

This initiative is part of the Tadawul Group’s contribution to the Financial Sector Development Program, a core element of Saudi Arabia’s Vision 2030, which aims to position the kingdom as a leading global investment hub.

Wael Al-Hazzani, program director of the post-trade transformation and CEO of Muqassa, described the second-phase rollout as a “pivotal moment” for the Saudi capital market. He highlighted the role of these enhancements in diversifying investment options, expanding opportunities, and creating a more efficient, transparent, and secure post-trade infrastructure.

“This initiative reinforces our commitment to strengthening the Saudi capital market’s infrastructure, ultimately positioning it as a leading global financial hub,” Al-Hazzani said.

The first phase of the post-trade infrastructure enhancements, completed in 2022, brought significant improvements to the market, including updates to business models and the transformation of post-trade technologies. These upgrades enhanced clearing, settlement, and custody services, laying the groundwork for the more advanced changes seen in phase two.

Among the key innovations in phase two are important upgrades to the Saudi Exchange, including enhancements to the derivatives market and market-making processes.

Market makers and high-frequency traders now benefit from unified trading functionalities across both cash and derivatives markets, improving liquidity and overall market efficiency. These updates also bring the Saudi Exchange in line with global best practices by improving transparency and harmonizing market microstructure elements, further solidifying its competitive position on the global stage.

Other improvements at the Saudi Exchange include an automated order flagging mechanism to cancel orders during trading engine disconnections, a new reporting service to enhance trade monitoring, and synchronized bid/ask quotes for market makers to optimize their quoting activity. Additionally, exchange members can now execute and accept bilateral trades directly through their order management systems.

Muqassa has introduced enhancements aligned with global Central Counterparty best practices. These updates include real-time trade reconciliation, improved reconciliation processes, and updates to trading limits for derivatives and covered call margining. These changes strengthen pre-trade risk management and operational efficiency. Furthermore, Muqassa’s transition to a multi-asset clearing engine places it among a select group of CCPs worldwide, capable of managing clearing activities across multiple asset classes on a single platform. These upgrades are expected to reduce costs, increase transparency, and enhance overall efficiency for market participants.

Edaa has made significant improvements to its post-trade infrastructure, particularly in messaging protocols and reporting processes. These upgrades, in line with international standards, aim to improve market efficiency, governance, and stability. The changes enhance the experience for capital market institutions, custodians, settlement agents, and investors, providing a seamless and secure post-trade environment.

Together, these enhancements are expected to bolster market stability, reduce systemic risks, and attract both domestic and international investors, positioning the Saudi capital market as a world-class financial center aligned with global best practices.