In 2019, the Saudi state oil giant Aramco made its initial public offering (IPO), raising $25.6 billion by selling three billion shares (only 1.5% of the company’s value). However, Saudi Aramco shares were only traded on the Tadawul Stock Exchange, the Saudi Stock Exchange.
As a foreign investor, you could buy/sell the company’s shares on the Tadawul stock exchange by opening a brokerage account with one of the “exchange members”. However, this was not feasible for most people.
In October 2024, Interactive Brokers announced it would be the first global broker to allow foreign investors to directly own and trade securities listed on the Saudi Exchange.
In this article, we will look at how you can (finally!) invest in Saudi Aramco or any other stock in the Saudi Stock Exchange, without the need to open an account with one of the “Exchange (Tadawul) members”.
Understanding the Saudi (Tadawul) stock market
The Saudi Stock Exchange, also known as Tadawul, is the platform where shares of Saudi companies, including Aramco, are traded. The Tadawul market is regulated by the Saudi Capital Market Authority (CMA), which sets rules for both domestic and international investors.
Key facts about Aramco and Tadawul:
- Aramco’s ticker symbol on Tadawul: 2222
- ISIN: SA14TG012N13
- Official currency: Saudi Riyal (SAR).
- Market hours: Sunday to Thursday, 10:00 AM to 3:00 PM local time (GMT+3).
- Saudi Index: Tadawul All Share Index (TASI).
Until now, if you wanted to trade any Saudi stock directly, you would need to open an account with an “Exchange member”, like Emirates NBD Bank or Saudi Awwal Bank (SAB). As an international investor, I found that to be too much of a hassle just to invest in Saudi stocks.
As such, most non-Saudi investors would use contract for difference (CFD) on trading platforms, like eToro, to gain exposure to Aramco stocks without actually owning them. In other words, you would be exposed to the daily market movement, but you would not have a share of Saudi Aramco.
This is the screenshot from my eToro account:
In practice, you would get the same returns as a Saudi investor owning the stock, but some people really like the fact that they own the stock.
Still, if you only want to replicate the price of Aramco stock, CFDs are a great way to have that exposure. Feel free to explore our eToro review.
Can I buy shares in Saudi Aramco?
Yes, you can. Now, all retail investors have direct access to the Saudi Stock Exchange.
On October 9, 2024, Interactive Brokers (Nasdaq: IBKR), a global automated broker, announced a partnership with SNB Capital, the leading investment bank in Saudi Arabia. This collaboration enables international investors to directly access and trade securities listed on the Saudi Exchange via the Interactive Brokers platform.
With this alliance, Interactive Brokers becomes the first global broker to offer foreign investors the ability to directly invest in Saudi stocks, real estate investment trusts (REITs), and exchange-traded funds (ETFs) alongside other global assets, all through a single platform.
The partnership was officially launched during a bell-ringing ceremony at the Saudi Exchange in Riyadh. The Saudi Exchange is among the top ten largest markets in the world, offering over 200 listed securities across 21 sectors. This collaboration aligns with Saudi Vision 2030, which aims to foster economic transformation and develop a competitive financial market with a diverse investor base.
How to buy Saudi Aramco stock: Step-by-step
Step 1: Choose the right broker
As a foreign investor, the easiest way to invest in Saudi Aramco stock is through Interactive Brokers (more on the platform below). Again, as noted above, some international brokers offer access to Saudi stocks through CFDs, which usually involve leverage and do not give ownership of the underlying asset.
Step 2: Ask for trading permissions
After signing up to Interactive Brokers, you will need to follow the following steps:
- Navigate to the user (“head/shoulders” icon) > Settings menu
- Select “Account Trading Permissions”:
- Select “Stocks” – “Add/Edit”:
- Select “Saudi Arabia” and click “Continue”:
- Review and acknowledge legal documents and click “Continue”
- A final message appears stating, “Your request to change Trading permissions was submitted”:
Step 4: Purchase Aramco stock
After getting the permissions and funding your account, you can place a buy order for Saudi Aramco shares (ticker: 2222) on Tadawul. Be mindful of market hours and exchange rates, as Tadawul trades in SAR.
- On the Interactive Brokers Web Portal, search for “2222” and select the first option:
- Click “Buy”
- Select your trading details:
- Number of shares: We have selected “1,000”
- Order type: We chose a market order for simplicity
- Click “Preview” to see estimated commissions:
- Your order has been submitted:
Please note the “Order is pending” because I did this investment on a Friday. Since the Saudi stock exchange is open from Sunday to Thursday, my order is pending (waiting for the market to open on Sunday). Otherwise, you would already be an Aramco shareholder!
Step 5: Monitor your investment
Keep track of Aramco’s performance, Tadawul market conditions, and global oil prices, as these factors heavily influence the stock. You may also want to set up automatic alerts or updates from your broker.
To set up an “Alert”, just click on it:
And select your parameters:
About Interactive Brokers
Interactive Brokers at a glance
Founded in 1978 and publicly listed in NASDAQ (ticker: IBKR), Interactive Brokers is a global online broker that surpassed major financial crises, showing resilience and a rigorous risk management process.
The Saudi Exchange is among the top ten largest stock markets within the 72 members of the World Federation of Exchanges and is the dominant market in the Gulf Cooperation Council (GCC). With over 200 listed securities across 21 sectors, it offers a versatile and diverse landscape of listed securities.
Clients of Interactive Brokers can diversify and expand their investment portfolios to include Saudi stocks, real estate investment trusts (REITs), and exchange-traded funds (ETFs) that trade on the Middle East’s largest stock exchange, broadening their investment prospects.
The currency conversion fee is 0.002% (minimum of $2) from USD (or any currency) to Saudi Arabian Riyal (SAR) or vice versa. The SAR is not available as a base currency, meaning any dividends received from Aramco will be immediately converted to USD or any other currency.
On the downside, Interactive Brokers’ fee structure is quite complex, the registration process is lengthy (but fully online), and the broker doesn’t offer commission-free trading.
However, when considering FX fees, narrower spreads, and the stock loan program, Interactive Brokers’ clients still get significant savings compared to most brokers.
Interactive Brokers also launched IBKR GlobalTrader, a modern mobile trading app to trade stocks, ETFs, and options, which is ideal for beginner investors. Some of the features of IBKR GlobalTrader include automatic currency conversions, fractional shares, and a demo account.
Want to know more about Interactive Brokers? Check our Interactive Brokers review.
Other ways to invest in Saudi Aramco
In case you want to have indirect exposure to Saudi Aramco, you can do it through these alternative methods (not only in Interactive Brokers but also in other brokers):
- Exchange-traded funds (ETFs): Some international ETFs, such as the iShares MSCI Saudi Arabia ETF, include exposure to Saudi Aramco, providing a more diversified investment.
- Mutual funds: Certain mutual funds with Middle Eastern or Saudi Arabian exposure may also hold shares in Aramco.
Is Saudi Aramco profitable?
Yes, Saudi Aramco is highly profitable and has consistently been one of the most profitable companies in the world. The company benefits from its status as the largest oil producer globally and has access to vast crude oil reserves with relatively low extraction costs.
The following image gives a visual exposure of how lucrative the company is:
More recently, in the 2ºQ of 2024, Saudi Aramco reported a record net income of SAR 109,010 million (or $29,070 million):
This profitability is largely driven by its oil production activities, strong demand for oil, and the global rise in energy prices. The company’s integrated downstream operations, which include refining and chemicals, further contribute to its financial performance.
Risks and considerations
Investing in Saudi Aramco comes with risks that all investors should consider:
- Oil price volatility: Aramco’s profitability is highly tied to the price of oil, which can fluctuate due to geopolitical, environmental, and economic factors.
- Regulatory risks: As a foreign investor, you are subject to Saudi Arabia’s financial regulations, which can change.
- Currency risk: Trading on Tadawul involves buying and selling SAR, so currency fluctuations between your home currency and the Saudi Riyal could affect your returns.
Conclusion
Investing in Saudi Aramco as a foreigner has become much more accessible thanks to the developments in October 2024.
The partnership between Interactive Brokers and SNB Capital allows international investors to purchase Aramco shares directly on the Saudi Tadawul stock exchange without going through local brokers.
This streamlined process opens up the Saudi market to a global audience, offering a chance to invest in one of the world’s largest and most valuable companies. While this presents a great opportunity, avoiding risks, including oil price volatility, regulatory changes, and currency fluctuations is essential.
By understanding these factors and following the steps outlined, investors can make more informed decisions and potentially benefit from Aramco’s long-term growth prospects.
FAQs
Where can I find the latest financial statements?
All the information concerning financial reports can be found here.
Where can I find the latest news about the company?
All the company news can be found here.
What is Aramco's dividend policy?
There are no exact dates. Their website indicates that they intend “to declare dividends on a regular basis with a view to building long-term shareholder value and providing sustainable dividend growth”.
How will I receive dividends from Aramco?
Dividends will be automatically deposited into your account.