Saudi Arabia is one of the largest crude oil exporters, and has the largest oil reserves in the world. The crude oil reserves of the Kingdom total 262 billion barrels. One company in Saudi Arabia, called Saudi Aramco (National Oil and Natural Gas Company) produces billions of barrels of oil every year.
But despite all the money the Saudi oil market pumps into the national economy, the Saudi stock market and stock market are still emerging markets and do not reflect the strong economic situation of which oil is the main source.
Saudi Arabia has only one stock exchange, but is considered one of the most important stock exchanges in the Arabian Gulf. Tadawul was established in the early 1970s, when there were only a few listed companies. A special ministerial committee was established to develop and regulate this market in 1983. At the beginning of the new millennium, the Financial Markets Authority, the only regulator of the local market, emerged. Finally, in 2007 Tadawul, the Saudi stock exchange, was established.
Tadawul provides local investors with Islamic stocks, bonds, ETFs and mutual funds. There are now more than 250 companies listed on the Saudi Tadawul market. Tadawul is a leading index of the stock market, measuring the performance of all listed companies in this local market.
This market, which is fairly modern, does not offer certain trading tools such as futures and option contracts, although Tadawul has entered an agreement with the US Nasdaq to develop the infrastructure of the Tadawul investment technology in the local Saudi market. If such cooperation is successful, it will have a significant impact on the introduction of new financial assets in the Saudi market.
Because investment in Tadawul is done through the US dollar, this market is somehow linked to the US stock markets. Tadawul is also well connected with other GCC exchanges. Price movements on the Saudi stock market are often reflected in price movements on major other GCC stock exchanges such as the United Arab Emirates and Bahrain.