RIYADH: Raising SR29.95 billion ($8 billion) from sukuk and debt instruments and securing SR198 billion in foreign investments are some of Saudi Arabia’s achievements underscored in the Kingdom’s Capital Markets Authority’s latest report.

In an analysis of 2023, the CMA set out how its efforts have led to new regulations, robust increased market listings, rigorous enforcement activities, and improved global financial rankings, all in alignment with Saudi Vision 2030.

In a press release, the authority’s chairman Mohammed El-Kuwaiz commended the Saudi capital market’s achievements, highlighting its ongoing collaboration with partners in the Financial Sector Development Program.

The work of the CMA came against a backdrop of a resurgence in emerging markets – including the Middle East and North Africa – after sell-offs prompted by the COVID-19 pandemic.

Global investor inflows into the region are driven by attractive returns and comprehensive reforms in capital markets, including the adoption ofl best practices and the digitalization of pre- and post-trade processes to boost liquidity.

Under the leadership of the CMA, significant regulatory advancements were made in 2023, including the approval of a new regulation and amendments to four existing principles, rules, and instructions. Additionally, the Council of Ministers sanctioned the Real Estate Contributions Law, thereby strengthening the legislative framework.

Additionally, the CMA introduced the Rules for Foreign Investment in Securities and updated critical regulations such as the Implementing Regulations of the Companies Law for Listed Joint Stock Companies, Capital Market Institutions Regulations, Instructions for Company Announcements, and Investment Accounts Instructions.

Sukuk and debt market

The adoption of the Debt Market Development Strategy marked a pivotal step in fostering market growth.

To stimulate secondary market activities and enhance liquidity, the CMA canceled its share of the trading commission on sukuk and bonds. As a result, the sukuk and debt instruments market reached 18.3 percent of gross domestic product.

Additionally, 70 sukuk and debt instruments were listed, raising a total of SR29.95 billion, with SR29.85 billion from private placements and SR100 million from public offerings.

According to the authority in a previous report in June, the Kingdom’s sukuk and debt capital market has grown significantly since 2019, surpassing SR30 billion with an annual growth rate of 7.9 percent.

Unlisted issuances showed a robust 9.6 percent yearly growth, expanding from SR72 billion in 2019 to SR105 billion by the end of 2023. The total size of the corporate sukuk and debt market reached SR125 billion, with the number of issuing companies tripling.

In the final quarter of 2023, sukuk and bond issuances rose 2.8 percent year-over-year to SR758.8 billion, driven by government-issued instruments. The CMA’s initiatives have significantly increased market activity, with traded values rising to SR2.5 billion and transactions surging from 3,722 in 2021 to 36,961 in 2023. Individual investor participation rose to 12.5 percent by the end of 2023, while the share of banks and government entities declined.

Foreign investment and market listing

According to the report, in 2023 net foreign investments in the Saudi capital market reached SR198 billion, marking a 7.7 percent increase from the previous year, with foreign investor ownership rising to SR401 billion.

The market also saw substantial growth in listings, with 43 new listings representing a 79 percent increase from the target. This included seven companies in the main market, 29 in the parallel market, six direct listings in the parallel market, and one traded real estate fund.

Global financial market rankings

Saudi Arabia’s capital market achieved notable global standings in 2023, ranking first among G20 countries in the Board of Directors Index.

Additionally, it secured second place in several key indices such as the Ease of Access to Financial Markets Index, Stock Market Capitalization Index, Shareholder Rights Index, and Venture Capital Index.

According to the IMD World Competitiveness Yearbook, Saudi Arabia improved its position in six out of 12 financial market indicators, underscoring its advancement and competitiveness on the global stage.

The report added that these rankings highlight the Kingdom’s strides in enhancing governance, market accessibility, investor protections, and overall market vibrancy.

BENGALURU: Oil prices were steady on Friday after key US inflation data for May was largely in line with expectations, lifting hopes that the Federal Reserve could start cutting interest rates this year, according to Reuters.

Brent crude futures for August settlement, which expired on Friday, were up 34 cents, or 0.4 percent, at $86.73 a barrel by 4:05 p.m Saudi time. The more liquid September contract was up 0.39 percent at $85.59.

US West Texas Intermediate crude futures rose 32 cents, or 0.4 percent, to $82.06.

Brent and WTI futures have risen nearly 2 percent this week, with both benchmarks on track for monthly gains of more than 6 percent.

The US personal consumption expenditures price index — the Federal Reserve’s preferred inflation gauge — was flat, in line with expectations. On an annual basis, PCE inflation rose 2.6 percent, as forecast.

Reaction in financial markets was minimal. For oil traders, the release passed unnoticed, said Charalampos Pissouros, senior investment analyst at brokerage XM.

Growing expectations of an imminent Fed easing cycle have sparked a risk rally across stock markets. Traders are now pricing in a 64 percent chance of a first Fed rate cut in September, up from 50 percent a month ago, according to the CME FedWatch tool.

Easing interest rates could be a boon for oil because it could increase demand from consumers.

“Oil prices have been converging with our fair value estimates recently, revealing the underlying strength in fundamentals through a clearing in the fog of war,” Barclays analyst Amarpreet Singh wrote in a client note.

Barclays expects Brent crude to remain around $90 a barrel over the coming months.

Oil prices might not change much in the second half of 2024, with concern over Chinese demand and the prospect of higher supply from key producers countering geopolitical risks, a Reuters poll indicated on Friday.

Brent crude is expected to average $83.93 a barrel in 2024 with US crude avergaing $79.72, the poll found.