The publication titled ‘Competitive Analysis of Top 25 Financial Brokerages in KSA – Financial & Operational Performance, Future Plans and Recent Developments’ undertakes analysis of the Saudi Arabia Capital Market Trading Industry, Business Model & revenue streams adopted by key players, Trading Channels used by participants, Investor’s Overview (Retail & Institutional) and Industry’s Future Potential.
With more than 200 companies listed as of December 2019, Saudi Arabia is governed by one stock exchange i.e. Tadawul. In February 2017, the government of Saudi Arabia launched parallel equity platform “NOMU” platform with lighter listing requirements & serving as an alternative to small scale companies wanting to go public. For a long time the trading market in the , country was informal in nature. It was only in 2003, the government established Capital Market Authority, the regulator of the market and thereby leading to the establishment of Saudi Stock Exchange Tadawul in 2007. With a market cap of SAR 9 Tn, Tadawul is the largest exchange in Middle East region and ranks among top 10 exchanges in the world.
Lagging Behind Other Countries in Product Offerings:-
However, when compared to other emerging countries Tadawul still lags behind in terms of different trading segments being offered to its customers. It was in July 2020 that the market allowed trading of derivatives, starting off with Futures Contract. This earlier limited the investor’s diversification capacity thereby forcing it to invest in conventional alternative investments. Providing a solution to its consumers, Brokerage Houses in the country offer investment opportunities in international markets of US, Europe and some of Asian Pacific countries as well. Perhaps due to high brokerage and international duty charges, affordability becomes an issue for investors.
Launch of Aramco- biggest ever IPO and Derivative products:-
In 2019, Aramco raised USD 25.6 Bn by launching country’s biggest ever IPO surpassing China giant Alibaba. The trust in state owned oil company attracted many first time investors to the market, recording a growth of ~15% and taking total number of individual investors to 5.47 Mn. With institutional & non institutional investments pouring in market recorded growth of >300% in market capitalization making Tadawul as the largest stock exchange in the region.
In an attempt to increase sophistication of domestic capital market, Saudi Arabia announced the launch of Derivatives Trading. With derivative trading being very rare in Middle Eastern markets, the development is expected to attract retail investors from GCC and other international countries. Keeping in mind the product complexity and safety of retail investors, the government also launched the Saudi Clearing House.
Highly Fragmented Competitive Landscape
Competitive landscape in Saudi Arabia Financial Brokerage Industry is observed to be highly fragmented with ~70% of market share occupied by top 25 players being led by Al Rajhi Capital, NCB Capital, Aljazira Capital, HSBC Saudi Arabia and others. With prevalent uniform brokerage commission the companies compete on parameters including international markets offered, advisory services, Investment products, trading channels offered. With majority of trades being placed via online channels, major players have been investing on the development of Online trading channels & mobile based platforms.
KSA Financial Brokerage Industry Future Growth Potential
Analysts at Ken Research estimate the industry to grow at a CAGR of ~10% in next 5 years; attributable to increased retail participation, new trading products introduction and increased foreign & institutional participation. With markets hitting lows during COVID period, there has been a surge in new account openings and increased trading activities. Key industry players are expected to further invest in trading channels development, offering research & technical analysis tools and diversify product portfolios by offering more international market opportunities.
Al Rajhi Capital
Saudi Fransi Capital
HSBC Saudi Arabia
EFG Herms Saudi Arabia
Merrill Lynch KSA Co.
Falcom Financial Services
Deutsche Securities Saudi Arabia
Al Khair Capital
Emirates NBD Capital
Citigroup Saudi Arabia
Time Period Captured in the Report:-
Historical Period: 2015–2019
Forecast Period: 2020-2024
Key Topics Covered in the Report:-
Industry Overview- Key Trading Statistics for Equity, Sukuk & Bonds, ETFs and Mutual Funds
Trading Summary-Value, Volume & Number of transactions, Online Trading and Sukuk & Bonds Trading statistics across top 25 players
Operational Indicators- Number of Individual Clients & portfolios, Online traders, AUM, Customer Acquisition Cost, Net Adjusted Working Capital and Number of Investment Centres for top 25 players
Pricing parameters for local & International Stock Exchanges
Financial Indicators covering Total Revenue, segmental Revenue, Operating Expenses, Operating Profit, Net Profit across top 25 players
For More Information on the research report, refer to below link:-
Ankur Gupta, Head Marketing & Communications