Saudi exchange to allow single-stock futures from next quarter

Saudi Arabia will start futures trading on single stocks in the second quarter of this year, the head of the Tadawul stock exchange said, as the Middle East’s largest bourse moves to boost liquidity.

The Tadawul will initially select about 10 liquid companies for futures trading, chief executive officer Khalid Al-Hussan said in an interview with Bloomberg TV on Monday.

“Post that, we will continue to seek investors’ demand on any additional single futures contracts to be added to the market,” he said.

The introduction of single-stock futures trading marks the latest move toward liberalising Riyadh’s exchange and attracting foreign investors. The kingdom opened up its stock market to increased international participation just over five years ago, and later allowing funds based abroad to buy into initial public offerings.

The Tadawul introduced index futures in August 2020, as exchanges in the Gulf increasingly allow derivatives trading.

Riyadh has continued to be an active market for IPOs, building on a boom last year fueled by ample liquidity and high oil prices. Investor demand for new share offerings in the Gulf has remained high, bucking a trend that has seen companies pull listings across the globe.

Al-Hussan said more than 70 IPO applications were currently under review by the regulator and the stock exchange, describing the pipeline of deals as “non-stop.”

Saudi Arabia’s benchmark Tadawul All Share Index is up 13 per cent this year in dollar terms, making it the seventh-best performing gauge globally.