Revealed: Top 10 companies in Saudi Arabia in 2016

Saudi Arabia’s Tadawul has been the largest loser in the GCC region so far this year, with shares bearing the brunt of the negative investor sentiment due to the indecision prevailing among OPEC and non-OPEC members to freeze oil production.

The kingdom has also scaled down its investments in various projects it had planned earlier.

The value of contracts awarded plummeted by 39 per cent in the first quarter of 2016 followed by a decline of 27 per cent in the second quarter on a quarter-on-quarter basis. Contraction in spending in the economy made investors skeptical and they heavily withdrew from Saudi stocks.

In measures to save the equity markets and boost investments, Saudi Arabia aid it will lift restrictions on foreign investment in its securities markets on September 4, sooner than previously indicated.

Other reforms in the stock market are also in line with the country’s vision to reduce its dependence on oil.

Some of the changes implemented are that each asset manager will only need to have a minimum of $1bn of assets under management globally to qualify as a foreign institutional investor in Saudi, instead of the earlier minimum of $5bn.

Each foreign institutional investor is also allowed to own directly a stake of just under 10 per cent of a single listed company, up from the earlier ceiling of 5 per cent. Other restrictions, including a ceiling of 10 per cent on combined ownership by foreign institutions of the market’s entire capitalisation have been removed. However, foreign investors combined will still be limited to owning 49 per cent of any single firm.

Another major step that will boost investment is Saudi Aramco’s IPO, which is estimated to be worth anywhere from $2 trillion to $10 trillion. Without institutional and foreign investor participation, absorbing such huge proceeds from the Aramco IPO would become difficult for the Saudi market.

Apart from reforms in the stock market, the kingdom also issued a record $17.5bn in September to plug its 13.5 per cent budget deficit.

TOP 10 COMPANIES IN SAUDI ARABIA

(By market capitalisation as of October 9, 2016. Source: Reuters Eikon, Markaz Research)

1. Saudi Basic Industries Corporation (SABIC)

Market capitalisation: $66.98bn
Sector: Energy – Fossil Fuels

2. Saudi Telecom Co (STC)

Market capitalisation: $28.79bn
Sector: Telecommunications Services

3. Al Rajhi Banking & Investment Corporation

Market capitalisation: $22.42bn
Sector: Banking & Investment Services

4. Saudi Electricity Co

Market capitalisation: $18.88bn
Sector: Utilities

5. National Commercial Bank

Market capitalisation: $18.72bn
Sector: Banking & Investment Services

6. Jabal Omar Development Co

Market capitalisation: $12.82bn
Sector: Real Estate

7. Almarai Co

Market capitalisation: $11.57bn
Sector: Food & Beverages

8. Kingdom Holding Co

Market capitalisation: $10.27bn
Sector: Investment Holding Companies

9. Saudi Arabian Mining Co

Market capitalisation: $9.84bn
Sector: Mineral Resources

10. Samba Financial Group

Market capitalisation: $9.41bn
Sector: Banking & Investment Services

Also read: Revealed: Top 10 companies in the UAE in 2016