The Tadawul Stock Exchange or what is more commonly known as Saudi Stock Exchange opened up for the first time for foreigners on 14th of June. The decision by the Saudi Capital Authority allowing foreigners in directly investing in Saudi equities is supplemented with a roll of restrictions and limitations. The opening which marks a milestone in the oil rich Kingdom’s history comes at a time when the global oil stocks plummet at record low. Experts now cast serious doubts over the economic well being of the Kingdom, given its current state of politico-economic affairs.
The Tadawul which is estimated slightly more than USD 500 Billion is the largest stock exchange in the Middle East and even larger than exchanges such as Mexico and Russia. The exchange though has remained limited to only local brokers and has had no role in the oil and tourism economy of Kingdom. Current permission though has kept around 5 prime companies located in Holy Cities restricted and has strict admission policies. The economy which drives on oil and tourism profits for the first time since inception (1932) is now seeking stock dollars, raising questions over its economic well being. Even in the worst of global historical economic crises, the Kingdom kept its sail up-mast and steady but not for now.
Saudi Arab which saw change of reins in January this year has since been on a roller coaster ride. From the oil crises to the US-Iran nuclear deal, the emerging ISIS threat to the local sectarian divide, from growing public dissent towards monarchy to internal power tussles, nothing seems to have settled for the new monarch, King Salman. The tumbling local affairs have had implications affecting Muslim countries and have found greater challenges for alliances like those between brother states of Pakistan and Turkey.
In the 83 years of history, the Saudi Government for the first time have felt the need of easing pressure on their oil resources and enhancing their reliance on stocks. This may not have been a traditional stance of the royal family, but the once known traditions are being ignored for long under the new monarch. From the cabinet changes to modifications in local women laws, nothing remains traditional and so has been the case with conflicts. Since his arrival in the international scenario, King Salman has remained beset with two full blown crises; the ISIS was at the borders though still not a challenge unlike the Yemeni Houthi militia which was posing a greater threat disturbing the balance of power in the neighboring state of Yemen. The Saudi economic indicators can be questioned and conclusions may differ but one thing this scenario certainly illustrates is that the government is looking forward to some extra credit. The conflict embedded Saudis have started taking the war toll.
Unlike many other states, the Kingdom is currently engulfed in local (Shia), regional (Houthi & Iran) and international (ISIS, Alqaeda) conflicts and is for the time being finding it difficult steering out. The GDP of the Kingdom has kept low (a direct affect of the oil prices) and the country now faces a severe job crisis with new laws barring foreigners from employments. Saudi Arab for the first time since the invasion of the Grand Mosque is being challenged within its borders and its capacity to deal in such scenarios has proven poor. With no war experience, heavy foreign intelligence reliance, and poor diplomacy with state of Pakistan, the Kingdom’s political and economic wellbeing appears to be grounded in trouble. Recent attacks by ISIS in border towns targeting Shia mosques and cross border rocket attacks by Houthi militia has exposed the Kingdom’s weak defence capability. And if this was not enough, the regional rival Iran is being well cajoled by the United States, exuding a strong impression of double-crossing the Sauds who have found the relation economically rewarding down the line. All of this is coming at a cost KSA is now looking to pay off by allowing business opportunity to investors. Will this gamble pay off? Will the foreigners with such lengthy restrictions be really interested in dealing with the Kingdom, and will the conflicts reach to a conclusion favorable to Sauds is yet to be determined.
