How to Invest in Saudi Arabia

If you’re looking to invest in the Middle East, then Saudi Arabia is certainly worth your attention. Actually, Saudi Arabia is best known among investors for its tremendous oil industry, with approximately 266.5 billion barrels of oil reserves. Saudi Arabia produces roughly 11 million barrels of oil per day, accounting for 11% of the world’s total production.

Even though the oil industry’s largest player may be largely-off limits to investors, you can still benefit from a number of other industries within the wealthy nation. Let’s take a look at Saudi Arabia’s economy and major stock exchange, and some options for U.S-based investors to take positions in its companies.

The Saudi Stock Exchange

The Saudi Stock Exchange (Tadawul) is the only securities exchange in the country and is supervised by the Capital Market Authority. With approximately 199 listed companies, it is heavily weighted toward the financial services and energy industries but includes many other sectors.

Overall, the index provides investors with fairly well-rounded exposure to the country’s economy. The primary measure of the Saudi Stock Exchange is the Tadawul All Share Index (TASI), which is similar to the S&P 500 in the United States. Since starting, the index has risen to more than 11,000 before falling to around 7,000 by 2021.

Saudi Aramco and Saudi Arabia’s Economy

As a quick reminder, Saudi Arabia’s largest company is the Saudi Arabia Oil Company, known unofficially as Saudi Aramco. Although the company has an estimated value of around $1.74 trillion in 2020, making it the world’s most valuable company, it is state-owned and inaccessible to investors.

But there are many publicly traded companies forming an auxiliary market for petrol supplies. Despite the oil industry’s dominance. The Saudi government is actively trying to diversify its economy and promote growth through privatization. Industries like telecommunications and electricity are already being privatized, while new ‘economic cities’ are being designed to encourage new developments outside of the energy industry.

If you want to invest in the Middle East, then Saudi Arabia is among the best country’s in the region you should consider.

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