Saudi exchange Tadawul launches four new indices

In a significant step towards enhancing access and understanding of the Saudi capital market, the Saudi Exchange has launched four new indices. The move is aimed at catering to various aspects of investment and bolstering its appeal to both institutional and retail investors.

These new indices aim to provide investment benchmarks and enable financial institutions to introduce investment products, aligning with evolving investor strategies.

The new indices

The large, medium and small cap indices are collectively called the Size Indices. They mirror the market’s composition, with Tadawul Large companies constituting 70 per cent of the free float market capitalisation, Tadawul Medium-sized companies contributing 20 per cent, and Tadawul Small companies making up the remaining 10 per cent.

These indices offer investors benchmarks, facilitating the expansion of their investment strategies and the pursuit of specific market opportunities.

The evolution of Saudi Exchange

The introduction of the Tadawul IPO Index is expected to play a crucial role in tracking the performance of companies listed on the Main Market within the past five years. This index provides investors with a benchmark to assess the performance of their IPO investments and presents a unique avenue to invest in emerging and rapidly growing companies.

To ensure a balanced representation of the entire market, the maximum weight of any index constituent will be limited to 15 per cent, mirroring the existing Tadawul All Share Index (TASI).

These indices will serve as reference points for various investment products, aiding institutional investors in monitoring the performance of market segments.

Mohammed Al Rumaih, CEO of the Saudi Exchange, said, “By introducing size indices that accurately depict the market’s composition, we aim to provide a comprehensive portrayal of the market and offer investors a diverse spectrum of investment prospects.

“Furthermore, the Tadawul IPO Index empowers investors to participate in the growth potential of newly emerging companies listed on the Main Market. We believe these indices will serve as invaluable benchmarks for investment products, granting both local and international investors access to and benefits from our dynamic and expanding capital market.”

This initiative marks a significant stride towards the continued development of the Saudi capital market.