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How to invest in Saudi Arabia stock market (Tadawul)

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António Francisco
Broker Analyst
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Franklin Silva
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Fact checked by: Franklin SilvaUpdated on Jan 4, 2025

Hello, investor! Are you looking to expand your portfolio into the Middle East’s largest stock exchange?

Until recently, investing directly in the Saudi Arabia Stock Exchange (Tadawul) was almost impossible for foreign investors. You either had to be a local resident or use derivatives like CFDs through brokers such as eToro.

However, with a new collaboration between Interactive Brokers (IBKR) and SNB Capital, foreign investors can now access Tadawul directly.

In this article, we will guide you step-by-step on how to invest in the Saudi stock market, whether through direct access, CFDs, or ETFs.

Video summary

Understanding the Saudi Arabia Stock Exchange (Tadawul)

The Saudi Stock Exchange, or Tadawul, is the largest in the Middle East and plays a key role in the global financial landscape. It is regulated by the Saudi Capital Market Authority (CMA), which sets rules for both domestic and foreign investors. Tadawul ranks among the top 15 global stock markets and is the dominant exchange within the Gulf Cooperation Council (GCC).

Here are some key facts about the exchange:

  • Number of listed securities: Over 415 across 22 sectors
  • Market hours: Sunday to Thursday, 10:00 AM to 3:00 PM local time (GMT+3)
  • Official currency: Saudi Riyal (SAR)
  • Saudi Index: Tadawul All Share Index (TASI)

Tadawul offers a versatile range of products, including stocks, real estate investment trusts (REITs), and exchange-traded funds (ETFs), making it an attractive destination for foreign investors looking to diversify their portfolios. Its economic significance continues to grow, especially as Saudi Arabia advances its Vision 2030 plan, aimed at diversifying the economy and reducing reliance on oil.

Historical barriers to foreign investors

Historically, foreign investors faced considerable challenges in accessing the Saudi stock market. Direct investment on the Saudi Arabia Stock Exchange (Tadawul) was primarily reserved for locals or with local brokers.

For example, if you were a foreign investor looking to gain exposure to the Saudi market, you could only do so by opening an account with an “Exchange member”, such as Emirates NBD Bank or Saudi Awwal Bank (SAB). This requirement to use a local broker was seen by many international investors as an unnecessary hassle for gaining exposure to Saudi stocks.

Because of these barriers, most foreign investors opted to use Contracts For Difference (CFDs) on platforms like eToro to gain exposure to Saudi stocks, such as Aramco, without actually owning them. In this case, you would benefit from the stock price movements but would not hold ownership of the shares themselves.

As a result, international investors relied heavily on derivatives, such as CFDs, or ETFs tracking the Saudi market to add Saudi stocks to their portfolios. This was the only practical way to gain exposure to Saudi equities without opening an account with a local broker – until recent changes made direct access more feasible.

Interactive Brokers and direct access to Tadawul for foreign investors

In a groundbreaking move, Interactive Brokers (Nasdaq: IBKR) announced a partnership with SNB Capital to offer foreign investors direct access to the Saudi stock exchange. As of October 9th, 2024, IBKR became the first global broker to provide this service, allowing investors to trade Saudi stocks directly through their platform.

With this new partnership, clients of IBKR can now invest in Saudi equities alongside other global assets such as stocks, options, futures, bonds, and ETFs.

We are pleased to work with SNB Capital and give investors the ability to trade Saudi equities in addition to our already vast array of global products and markets at low cost.
Milan Galik, Chief Executive Officer of Interactive Brokers

The partnership was formally launched during a bell-ringing ceremony at the Saudi Exchange in Riyadh, attended by SNB Capital’s Head of Securities, Loai Bafaqeeh, and James Bradie, IBKR’s Senior Executive Officer for their new office in Dubai.

What products can I invest in the Saudi Arabian stock market as a foreign investor?

According to Milan Galik, Chief Executive Officer of Interactive Brokers, as a client of Interactive Brokers, you can diversify your portfolio by investing in various products available on the Saudi Arabia Stock Exchange (Tadawul), including:

  • Exchange-Traded Funds (ETFs): Funds available on the Middle East’s largest stock exchange, providing broad exposure to the Saudi market.
  • Real Estate Investment Trusts (REITs): Investments in income-generating real estate through publicly traded REITs.
  • Saudi stocks: Direct ownership of individual shares in Saudi companies.

This diverse selection allows you to capitalize on the potential of the Saudi market, which is undergoing significant growth under Saudi Arabia’s Vision 2030.

How to invest in Tadawul through Interactive Brokers as a foreign investor?

To get started with investing in the Saudi stock market through IBKR, follow these steps:

1. Open an account: If you’re not already an IBKR client, you can open an account here.

2. Navigate to the Settings menu: In your Interactive Brokers account dashboard, click on the user icon (shown as a head and shoulders icon) in the upper-right corner to access the Settings menu.

IBKR web app

3. Access trading permissions: Once inside the settings menu, scroll down and locate Trading Permissions” under the “Trading” section. Click on Trading Permissions to proceed to the next step.

IBKR web app

4. Add permissions for stocks: In the Trading Permissions page, you will see several options for asset classes. Find the Stocks option and click on Add/Edit.

IBKR web app

5. Select Saudi Arabia: On the next screen, you will see various markets you can select. Scroll down until you find Saudi Arabia under the Middle East section. Check the box for Saudi Arabia, then click Continue to proceed.

IBKR web app

6. Submit request: After selecting Saudi Arabia as a trading region, a confirmation screen will appear indicating that your request to add trading permissions for Saudi Arabia has been submitted. This process usually takes 24-36 hours for approval.

IBKR web app

7. Activate trading permissions: Once your account is set up, you’ll need to activate permissions for trading on the Saudi Exchange by navigating to the “Market Data Subscriptions” section on the IBKR platform.

IBKR web app

How to buy Saudi local stocks as a foreigner?

As a foreign investor, as mentioned earlier in this article, you can now buy local Saudi Arabian shares. For this example, we will focus on Al Rajhi Bank (1120), the third-largest company listed on the Saudi Stock Exchange (Tadawul).

Here’s a step-by-step guide to buying Al Rajhi Bank shares on IBKR:

1. Search for Al Rajhi Bank and select it:

  • In the IBKR platform, type “1120” into the search bar;
  • From the search results, select “Al Rajhi Bank – Tadawul”.
IBKR web app - How to buy Al Rahji Bank (1120)

2. Open the stock page:

  • After selecting Al Rajhi Bank, you will be taken to the stock page.
  • Here, you can view essential details like price, performance, and charts.

Press the Buy button to start the purchase process.

IBKR web app - How to buy Al Rahji Bank (1120)

3. Select your trading details:

  • In the “Buy Order” window, enter the number of shares you wish to purchase.
  • You can also adjust other trade settings, such as market or limit orders, based on your strategy.
IBKR web app - How to buy Al Rahji Bank (1120)

4. Review and execute the order:

  • Review the order details, including the total cost and estimated fees.
  • In this example, the fees are 8.58 SAR. Once everything is confirmed, press Submit Buy Order to complete the transaction.
IBKR web app - How to buy Al Rahji Bank (1120)

Now you’re officially invested in the Saudi Arabian stock market with shares in Al Rajhi Bank. Keep in mind that Tadawul operates in Saudi Riyals (SAR), and IBKR will automatically convert your funds when trading. Be mindful of currency conversion costs, as these can affect your overall returns.

What Saudi local stocks can I buy?

As a foreign investor, you have access to a wide range of stocks on the Saudi Stock Exchange (Tadawul) on Interactive Brokers.

Below is a list of the top 10 Saudi local companies by market capitalization that you can buy, based on data from TradingView:

  1. Saudi Aramco (2222) – The world’s largest oil producer and one of the most valuable companies globally, focused on petroleum and natural gas.
  2. ACWA Power (2082) – A leader in renewable energy and desalinated water production, driving Saudi Arabia’s clean energy goals.
  3. Al Rajhi Bank (1120) – One of the largest Islamic banks in the world, providing comprehensive financial services and products.
  4. SABIC (2010) – A global leader in chemicals, manufacturing petrochemicals, fertilizers, and metals.
  5. Saudi Telecom Company (7010) – The primary telecommunications company in Saudi Arabia, offering mobile, internet, and enterprise services.
  6. The Saudi National Bank (1180) – The largest financial institution in Saudi Arabia, formed from the merger of NCB and Samba Financial Group.
  7. Ma’aden (1211) – Saudi Arabia’s largest mining company, focused on gold, phosphate, aluminum, and other minerals.
  8. Dr. Sulaiman Al Habib Medical Services Group (4013) – A leading healthcare provider in Saudi Arabia, managing hospitals and medical centers.
  9. Elm Company (7203) – A major technology and digital services provider, specializing in secure IT and business solutions.
  10. Riyad Bank (1010) – One of the oldest and most prominent banks in Saudi Arabia, offering retail and corporate banking services.

If you would like to know how to invest in the biggest Saudi Arabian stock by market cap, we provide a step-by-step guide on How to buy Saudi Aramco stock as a foreign investor.

What Saudi local ETFs can I buy?

If you’re a foreign investor outside of Europe and the UK looking to diversify directly into the Saudi market, there are various local ETFs available on the Saudi Exchange (Tadawul), and you can invest in them directly through Interactive Brokers (IBKR).

Here’s a list of some popular Saudi local ETFs you can explore:

  1. YAQEEN 30 ETF (9400) – Tracks the top 30 large-cap companies in the Saudi market.
  2. YAQEEN Petrochemical ETF (9401) – Focuses on Saudi Arabia’s petrochemical sector.
  3. SAB MT30 ETF (9402) – Based on the MSCI Tadawul 30 Index, tracking the top 30 companies by market cap.
  4. Albilad Sukuk ETF (9403) – A Sharia-compliant ETF investing in Saudi government Sukuk (Islamic bonds).
  5. Alinma Sukuk ETF (9404) – Another Sukuk-focused ETF offering Sharia-compliant fixed-income exposure.
  6. Albilad Gold ETF (9405) – Tracks the performance of gold prices under Sharia-compliant guidelines.
  7. Albilad MSCI Saudi ETF (9406) – Provides diversified exposure across various sectors in the Saudi stock market.
  8. Albilad US Tech ETF (9407) – A Sharia-compliant ETF providing exposure to U.S. tech companies.
  9. Albilad Saudi Growth ETF (9408) – Targets high-growth companies within Saudi Arabia, focusing on small and medium-sized enterprises.

If you would like to know more about each ETF you can visit the official Saudi Exchange ETF Market Watch.

Can I buy Saudi local ETFs from Europe and the UK?

As a European and British investor, you will not be allowed to invest directly in local Saudi ETFs due to KID regulations. This regulation requires that investment products marketed to retail investors in the EU must provide a Key Information Document (KID), which outlines the products’ features, risks, and costs in a standardized format. The PRIIP regulation aims to enhance transparency and protect retail investors by ensuring they have access to transparent and comparable information about investment products.

ETFs like YAQEEN 30 ETF (9400) do not produce these KIDs. Consequently, these ETFs do not comply with PRIIPs requirements and are therefore inaccessible to ordinary retail investors on Interactive Brokers.

IBKR web app

For further details, refer to the official documentation of the PRIIPs regulation provided by the European Union here.

How to invest in Saudi local ETF alternatives (IKSA) from Europe and the UK on Trading 212?

In Europe, one of the most popular alternatives to local Saudi ETFs is the iShares MSCI Saudi Arabia Capped UCITS ETF USD Acc (IKSA). According to data from justETF.com, it has the largest fund size among ETFs available to European investors.

Below are the step-by-step to purchase the IKSA ETF on Trading 212 in Europe:

Step 1: Search for IKSA and select it

  • In the Trading 212 app, type “IKSA” in the search bar;
  • Select the iShares MSCI Saudi Arabia Capped (Acc) ETF from the search results.
Trading 212 Mobile app - IKSA ETF

Step 2: Open the ETF page

  • After selecting IKSA, you will be taken to the ETF’s page;
  • On this page, you can view essential details about the ETF, including its price, performance, and historical chart;
  • Press the Buy button to start the purchasing process.
Trading 212 Mobile app - IKSA ETF

Step 3: Set trade parameters

  • In the “Buy” window, enter the number of shares you wish to purchase;
  • You can also modify other trade settings, such as market, limit, stop, or stop-limit orders, depending on your strategy.
Trading 212 Mobile app - IKSA ETF

Step 4: Review and execute the order

  • Before finalizing, review the order details, including the number of shares and the estimated total cost;
  • Once everything is confirmed, press Send buy order to execute your trade.
Trading 212 Mobile app - IKSA ETF

Step 4: Review and execute the order

  • Before finalizing, review the order details, including the number of shares and the estimated total cost;
  • Once everything is confirmed, press Send buy order to execute your trade.

By following these steps, you gain exposure to Saudi Arabian equities by investing in the IKSA ETF using the Trading 212 mobile app. New users can also receive a free fractional share worth up to £/€100 by signing up with the Trading 212 promo code: IITW.

Why invest in Saudi Arabia?

Saudi Arabia’s economy is undergoing a significant transformation under Vision 2030. This initiative aims to diversify the economy, with a focus on sectors such as energy, finance, and infrastructure. Tadawul, the largest stock exchange in the Middle East, offers a gateway to these high-growth sectors.

Investing in Saudi equities allows you to tap into the country’s immense economic potential. As Milan Galik of IBKR noted:

Saudi Arabia, the largest economy by GDP and leading capital market in the Middle East, is currently undergoing significant social and economic transformation under its overarching national strategy.

Risks and considerations

While the Saudi market presents exciting opportunities, there are risks to consider:

  • Geopolitical risks: The Middle East is a politically volatile region, and tensions can influence the stock market;
  • Oil price volatility: Given Saudi Arabia’s status as a major oil exporter, fluctuations in oil prices can impact the overall economy and stock market;
  • Currency conversion costs: As mentioned earlier, trading in SAR comes with conversion costs, which can affect your returns.

Despite these risks, the diversification benefits of including Saudi stocks in your portfolio can be significant, especially with the ongoing economic reforms under Vision 2030.

Bottom line

In summary, investing in the Saudi stock market is now within reach for foreign investors with Interactive Brokers. Whether you’re looking to invest directly in Saudi stocks such as Aramco or explore local ETFs, you have several options to diversify your portfolio into the Middle East’s largest stock exchange.

For European and UK investors, while local Saudi ETFs may not be accessible due to regulatory constraints, alternatives like the iShares MSCI Saudi Arabia ETF (IKSA) provide similar exposure within a compliant framework.

Platforms like Interactive Brokers and Trading 212 offer convenient access to these opportunities, helping you engage with the Saudi market from wherever you are.

We hope this article has given you the guidance needed to start your investment journey in Saudi Arabia. If you need further guidance or have questions, feel free to reach out to us. We wish you the best in your investment journey!

FAQs

Can I invest in the Saudi Arabia stock exchange from the US?

Absolutely, as a U.S. investor, you can now explore opportunities in the Saudi market through Interactive Brokers here.

Can I invest in the Saudi Arabia stock exchange from Canada?

Certainly, as a Canadian investor, you can access the Saudi Arabia stock exchange through Interactive Brokers here.

Can I invest in the Saudi Arabia stock exchange from the UK?

Absolutely, UK investors can explore the Saudi market through Interactive Brokers here.

Can I invest in the Saudi Arabia stock exchange from Europe?

Yes, as a European investor, you can easily access the Saudi Arabia stock exchange through Interactive Brokers here.

Can I invest in the Saudi Arabia stock exchange from India?

Of course, as an Indian investor, you can take advantage of the Saudi market through Interactive Brokers here.

Can I invest in the Saudi Arabia stock exchange from Hong Kong?

Absolutely, investors from Hong Kong can explore the Saudi market via Interactive Brokers here.

Can I invest in the Saudi Arabia stock exchange from Australia?

Absolutely, as an Australian investor, you can explore the Saudi market through Interactive Brokers here.

Can I invest in the Saudi Arabia stock exchange from Singapore?

Yes, Singaporean investors can now access the Saudi Arabia stock exchange through Interactive Brokers here.

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António Francisco
Broker Analyst

António is a Broker Analyst with a BSc in Finance and Accounting. He is passionate about financial markets and innovative projects.

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