Saudi stock exchange's 2017 net profit soars five fold on higher income

Tadawul's revenue last year increased by 74 per cent

Visitors look at stock price information displayed on a digital screen inside the Saudi Stock Exchange, also known as the Tadawul, in Riyadh. Bloomberg

The Saudi stock exchange, the Arab world’s biggest equities market, on Tuesday said its net profit last year grew by more than fivefold as it rolled out structural and regulatory reforms and expanded its offerings.

Net income for 2017 reached 129.8 million Saudi riyals (Dh127m), a 543 per cent rise from the levels recorded in 2016, Tadawul, as the exchange is known, said in its annual report.

Revenues for the period climbed 74 per cent year-on-year to reach 545.4m riyals.

Saudi Arabia's $530 billion stock exchange, the biggest Arab bourse which is up 15 per cent year to date, is attracting more foreign inflows as it undertakes reforms that helped it get an upgrade to emerging market status this year. Saudi authorities are planning to launch an initial public offering of the exchange, but the timeframe for that has not been disclosed

Global equities index provider S&P Dow Jones Indices said earlier this month it will change Tadawul's status to an emerging market in 2019.

S&P Dow Jones Indices is the third index complier to elevate Saudi Arabia’s market to emerging market status. Global index compiler MSCI and FTSE Russell earlier this year upgraded Saudi Arabia to emerging market status. These upgrades are expected to bring tens of billions of dollars of investment to Saudi equities from global money managers which track these gauges.

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The growth in both profitability and revenues is in contrast to the fortunes of some of the other regional equity markets that missed a global equities rally last year, with S&P 500 setting multiple records through 2017.

Tadawul is central to the Saudi Arabia’s efforts to increase foreign direct investments into the country as part of its economic reform agenda. The exchange launched Nomu -  the parallel market - in 2017 as a step to support the national economy and diversify its product offering to local and regional investors.

Rolling out the T+2 settlement cycle, introducing securities borrowing and lending as well as covered short-selling frameworks are among the operational and regulatory changes implemented in 2017, Tadawul said.