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00:00We're going to talk about capital markets and new developments between Saudi Arabia
00:05and Hong Kong.
00:06As we know, the city is emerging as a gateway for Middle East capital flow and we're talking
00:12about the new developments and policies and what opportunities they bring.
00:16So Hanan, for starters, can I ask you to set the scene of what's happening in Saudi Arabia
00:23capital markets and the role that your firm and you play in it?
00:26Thank you, Lulu.
00:28First of all, it's my pleasure to be with you here today.
00:32The sessions in the morning were really insightful and educating with a focus on the Asian markets.
00:38So it's my pleasure to share some overview and insights for my side of the world and
00:43our market, which is the Saudi capital market.
00:47And to start with covering briefly the Saudi capital market.
00:53So it has undergone a fundamental transformation over the past decade to evolve into one of
01:02the main emerging markets globally speaking.
01:08The vision that we have, Vision 2030, which we have on a national level, has been a main
01:13driver for this growth.
01:15And the vision has put the capital market and having an efficient capital market at its
01:22core for economic diversification and having the funding that the private sector needs.
01:30So our market today is sized at 2.6 trillion US dollar in terms of market capitalization.
01:40And to look at the Saudi market, we don't focus on the size, but the growth of the market overall.
01:49And this growth has been governed and driven by, I would say, three powerful engines.
01:59First of all is the supply side evolution.
02:05So again, the vision is moving, first of all, public assets or state-owned assets into the
02:14public hands.
02:18The Saudi market today is one of the top markets globally in the number of IPOs, which is something
02:30that I think we share with Hong Kong Exchange.
02:34In 2025, the Saudi market ranked number one in the world, actually, in the number of IPOs.
02:42This is when it comes to the supply side.
02:44The second powerful engine is the demand side opening.
02:50And by opening, I'm referring to the change in the investor base in Saudi.
02:57The client base or the investor base have changed drastically from being a retail domestic market
03:07into an institutional and international one.
03:11The Saudi market was opened for foreign investors back in 2015, but at that time there were stringent
03:21requirements for foreign investors to participate.
03:25We're talking about a minimum of US$5 billion assets under management and a minimum number
03:33of years and experience in asset management.
03:36And the investor types were limited to banks and financial institutions.
03:43Fast forward, at the beginning of this year, the regulator, our regulator, the CMA, have completely
03:51removed these qualified foreign investor requirements.
03:55Now, the market is fairly open to all segments of international investors from all around the world.
04:05So, this is when it comes to the demand side.
04:09Of course, with the inclusion in the emerging market indices, this played a critical role in inviting
04:17foreign investors and the increase of their participation in the market.
04:23Third is the debt market renaissance.
04:28Because the equity market got the headlines for quite some years.
04:33But, arguably, the debt market is as important.
04:39The government bonds and sukuk market paved the way for the corporate also debt issuances,
04:48which creates now two pathways for issuers to raise capital and come to the market for funding.
04:57So, this is, in a nutshell, an overview of the market.
05:02So, you have the demand for listing, opening up to foreigners, and also developing the credit markets.
05:07Yes.
05:07In terms of working with Hong Kong, about three years ago, we saw this basket of policies initiatives
05:14coming out from the two places.
05:17What are the developments since?
05:19Can you walk us through what's happened and what should we expect next?
05:23Right.
05:25So, our partnership with Hong Kong Exchange has honestly moved from soft engagements to real connectivity.
05:34And this goes beyond having a financial and bilateral agreement.
05:42I actually, one time, came across a metaphor that is not far from reality, describing the movement
05:51that's happening now to the Silk Road that has history of 2,000 years ago, where the Silk Road
06:00were to connect the Arabian Peninsula with southern China.
06:06Today, with these links and connectivities, we're not reinventing the Silk Road, but we're digitizing it in a way.
06:16So, today, the first, actually, ETF that covers the Saudi market is listed in Hong Kong Exchange.
06:25And it's tracking a lot of interest from investors in the region.
06:31Vice versa, we also have an ETF in the Saudi market that links the Hong Kong Exchange and the China
06:37Index.
06:38And this is the foundation, I would say, layer to many more products to be listed in the local markets.
06:49And we see always this interest from investors in China and Hong Kong in our markets and also from Saudi
06:58investors to the Hong Kong and Chinese market.
07:02The PIF alone have signed, I think, up to 50 billion US dollars of investments in Asian markets
07:12and have increased their presence of three regional offices between Hong Kong and China,
07:19China, which also follows the Silk Road metaphor of not being a one-way traffic, but it serves for the
07:31mutual benefits of both countries.
07:34And what about the connected listings?
07:36Right. So, the next steps to follow as things that we can do together is, of course, normally the cross
07:46-listings.
07:46And we're looking at this together with the Hong Kong Exchange and our regulators, of course, of how can we
07:54realize the cross-listings between the two markets.
07:58We have recently launched the depository receipt regime and framework, which can help, actually, of listing of foreign companies in
08:10the local market.
08:10So, we have this path and we have the classical path of cross-listings and having links between the depository
08:19centers in the two markets to be able to list companies.
08:24Now, I know that you want to look for, you want to be careful in terms of what types of
08:29companies can qualify for the cross-listings.
08:32Right.
08:33I'm read as a successful example.
08:35Yes.
08:36What do you see as the type of companies that could become successful candidates for these types of listings?
08:43So, as an infrastructure and exchange and depository center, we do not specify a type of company or a type
08:50of sector, per se.
08:52And the first approval comes usually from the regulator to list a company.
08:59Having that said, today, our requirements for cross-listing that the company needs to be listed in its home country
09:07first.
09:09So, this is the first check that we need to run over and then the disclosures and being able to
09:17comply with the regulations in the Saudi market.
09:21This is, of course, another important factor.
09:24Now, I have to ask about war, the impact in the region, and how are you seeing that affecting money
09:31flows?
09:32Right.
09:34So, with the unfortunate, like, circumstances that the region have witnessed, an interesting, actually, observation we've seen in the market,
09:46that there was an increased trend of foreign participation since the beginning of the year.
09:54And this hasn't slowed down with the war or the events associated with it.
10:00When you talk about foreign participation, what is the definition of that?
10:07When we say foreign participation, I mean how foreign investors contribute to daily trades,
10:16and, of course, the ownership they represent as a segment of investors in the market.
10:23So, this is something that was a positive, actually, outcome that we've been looking at closely,
10:32and it's something that indicates that foreign investors are here for the long run.
10:38They are looking for the long-term investment objectives,
10:43and they realize that the current circumstances are basically backed by a lot of fundamental evidence,
10:53a lot of operations, a lot of operational resilience that the market has,
10:57and a lot of diversity in terms of opportunities.
11:02We have today in the market algo traders and high-frequency traders,
11:07and they're growing, actually, in how much they contribute to the daily trades.
11:14Today, we have them as they reached 30% of daily trades are being done by algo traders,
11:21and you would see that algo traders are pretty much sensitive to all the events that happen.
11:28However, having that said, it's still an upward trend of algo traders together with the foreign participation.
11:38So, this is something that's a factual, actually, aspect that the market have lived.
11:44Interesting you mentioned high-frequency trading firms because Hong Kong is one of those centers
11:49that attracts a lot of these firms.
11:51Is this also something that Saudi Arabia is looking at,
11:55and what kind of policies and infrastructure are you building in place for these kinds of firms?
12:00So, absolutely, they are really playing a major role in increasing liquidity in the market,
12:09and we try to provide, from an infrastructure point of view, the tools that they need.
12:17For example, the low-latency tools that they require to be able to execute, especially the high-frequency traders.
12:29So, this is something that we offer through our innovation arm, WAMAD.
12:35It's a subsidiary to Saudi Tadawil Group.
12:38And we see an increasing demand to these low-latency services,
12:44with the demand and the increase of the HFTs and the algo traders in the market.
12:49And are you seeing a successful attraction for talent for people who want to relocate to the region?
12:55Has that been impacted in any way?
12:57Actually, it was very interesting to hear about the talents and the different concerns around it
13:04in the previous panels, and the demographics as well.
13:10This is something that I was hearing very carefully and thinking about the differences
13:16between the regions of the world in that matter.
13:20For example, the demographics in Saudi, we have more than 60% of the population under the age of 30.
13:29So, this is something that is very powerful in terms of realizing the national economic development on a national level.
13:41You expect these newer generations to be scientists and engineers to be able to keep up with how the world
13:50is changing,
13:51with also the AI and everything that we've heard this morning.
13:55Yeah, 60% of the population so young.
13:58That would have huge implications in terms of how you develop policies and the economy model,
14:04which is very different from what we're experiencing in Asia and many countries.
14:08So, for our people in the audience, if they are looking to tap opportunities from the Middle East,
14:16what would your advice be for people who are looking at the next developments, what to look out for?
14:22Right.
14:24So, we've been very focused in Saudi to tell our story, our growth story to the world.
14:29And we've done this and realized some important results that put our market very clear on the map as an
14:40investable market,
14:41as well as aligned in terms of infrastructure and policy with the international markets.
14:47So, when it comes to the equity market, we worked, of course, on different tools that institutional investors usually look
14:58for.
14:59One example is adopting the omnibus structure.
15:03Omnibus structure is very important for the back-end operations.
15:08And that's for efficiency of administration?
15:10Yes, absolutely.
15:12So, it's much easier, operationally speaking, to be executing trades in an omnibus structure.
15:19So, this is something.
15:21Another thing is that we've seen a very, very uptake and increase in the securities borrowing and lending
15:29and the short selling, of course, which follows normally.
15:33And it is adopted in the market in a way that it helped in the price discovery of the Saudi
15:42market.
15:43So, it's something that institutional investors are keen to find in the market and then we're making it available for
15:50our market.
15:51And on the short selling policies, what was the reason for developing these, allowing investors to participate in them?
15:58So, short selling is an important tool in any market because investors would invest long and short and they have
16:08long strategies versus short strategies.
16:11I'm talking about asset managers, hedge funds, etc.
16:15So, it's very important having a long market exposure is a bit limited for institutional investors.
16:23So, it's a crucial aspect of what a market as an infrastructure can provide.
16:29And then on the debt market, which is a focus to us and our regulator at the moment because, you
16:38know, we want to mimic the growth and the success story of the equity market.
16:43And we've done this, we've seen the trading activities have doubled in a year in the debt market.
16:52And if we consider the government debt market, it is now, as I said, included in the JP Morgan Emerging
17:00Index, which is an important milestone that, of course, brings international flows into the local market.
17:08We are now also linked with international depository centers, which is the access, of course, for foreign investors to reach
17:19our local market and not having the need to open accounts locally so they can invest through their accounts in
17:28Euroclear, Clearstream.
17:30Another infrastructure improvement that we've implemented recently is the OTC trading in the debt market.
17:40So, usually, the debt trades are done over the counter and this is something that was really well anticipated by
17:49the international investor community and have helped increase the liquidity also in the debt market.
17:55So, these are the main points of developments that we've worked on in the market recently.
18:02So, overall, the trend seems to be relaxing rules and also development of different asset classes.
18:07Absolutely.
18:08championship wins.
18:08All right.
18:08We'll come to them.
18:08We'll be here in the chat about this study books and share our lovely domestic society.
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