Summary
Investing in stocks is an effective method to leverage the potential of prospering businesses to create wealth. For many newbies looking to buy shares, it can be daunting to get started. But you can start buying stocks in minutes with an online stock broker. Furthermore, Saudi citizens can easily buy stocks listed on the domestic market. Foreigners can also do this but must go through the Qualified Foreign Investor Program.
In contrast, Saudi investors can purchase shares from international markets such as the US, UK, and Japan using a licensed online broker. Using an international broker is often the smoothest option for foreigners in Saudi Arabia as it does not require going through a qualified foreign investor program. It’s important to note that buying shares in any stock market involves risk, and Tadawul is no exception. The Saudi Arabian economy is heavily dependent on the oil and gas industry, and oil price fluctuations can significantly impact the stock market.
People who are learning how to invest in stocks should be aware that opening an account with a stock broker is a simple process. With online trading platforms, clients can buy stocks online from the comfort of their homes. The fees and commissions levied by trading platforms should also be considered while researching how to buy shares in Saudi Arabia. Commission-free trading is available on many online trading platforms. However, there are additional costs involved. Hence, before you start trading stocks, you should carefully consider the commissions your broker charges. This guide also includes reviews, a thorough FAQ section, and our take on the best shares to buy today.
In Saudi Arabia, stock brokers have an easy account opening process, making it effortless for traders to trade. When looking for how to invest in shares, here are the six steps to help you get going.
- Apply for Investor Number (NIN)
- Register with an online Stock Broker
- Deposit Funds
- Select your Favourite Shares
- Buy the selected Shares
- Monitor your Portfolio
Thanks to advances in technology, it is now possible to buy listed stocks online through online brokers. And when buying shares in Saudi Arabia, it has to be done through a market. Today,
Saudi Arabian clients can access and purchase stocks and stock CFDS listed in global exchanges worldwide through online brokers. Capital.com for example, offers stock CFDs to Saudi Arabian clients listed in global exchanges. Some of the exchanges that clients can access through online brokers are given below.
Tadawul (Saudi Stock Exchange)
Regulated by the Capital Market Authority (CMA), Tadawul is the only stock exchange in Saudi Arabia. It was established in 2007. Having a market capitalization of around $2 trillion, Tadawul is one of the largest stock exchanges in the Middle East and North Africa region. The exchange currently listed 199 companies with a heavy weightage in energy and financial services. Regardless, companies in other sectors like healthcare and life sciences, chemicals, and tourism are also listed on the exchange.
Tadawul’s main index is Tadawul All Share Index (TASI), similar to the US S&P 500. Saudi exchange also offers investors a range of products and services, including index products, derivatives, CFDs, stocks, and exchange-traded funds (ETFs). It also allows beginner investors to invest in modest amounts.
New York Stock Exchange (NYSE)
The New York Stock Exchange (NYSE) on Wall Street in New York City is one of the largest stock exchanges in the world. It started trading stocks, bonds, and other assets in 1792, making it one of the oldest stock exchanges in the world. More than 2,400 stocks from a wide range of industries are traded on the New York Stock Exchange (NYSE). Tech titans like Microsoft and Amazon, major banks like JPMorgan and Goldman Sachs, household-name businesses like
McDonald’s and Procter & Gamble, and many more are just some of the corporations that call the New York Stock Exchange home.
NASDAQ
NASDAQ, the National Association of Securities Dealers Automated Quotations, was established in 1971 as an American stock exchange. It is the second most extensive stock exchange in the world by market capitalization, behind only the New York Stock Exchange (NYSE). The NASDAQ is home to 3,300+ listed companies across numerous industries, including IT, technology, finance, and consumer goods.
Apple, Amazon, Facebook, and Google are just a few of the massive and widely recognized tech giants that trade on the NASDAQ.
London Stock Exchange
The London Stock Exchange (LSE) has been operating for nearly 300 years, making it one of the world’s oldest and largest stock exchanges. It is home to over 1,000+ companies, including some of the largest and best-known corporations in the UK and around the world. Multiple markets are run by the London Stock Exchange (LSE), such as the Main Market for large, well-established corporations and the Alternative Investment Market (AIM) for smaller, high-growth enterprises.
The Bolsa De Madrid
Spain’s primary stock exchange is the Bolsa de Madrid or Madrid Stock Exchange. Its current location in the centre of Madrid’s business sector, which dates back to its founding in 1831. Many prominent Spanish organisations are listed on the Madrid Stock Exchange. These include
Banco Santander, Telefonica, and Inditex (Zara’s parent company). The exchange plays a crucial role in the Spanish economy, providing a platform for companies to access financing and for investors to trade securities.
Hong Kong Stock Exchange
The HKEX is one of the most active and exciting financial markets in Asia.When it comes to initial public offers (IPOs), the Hong Kong Stock Exchange is among the world’s most important stock exchanges. There are 2,597 listed firms in 2022 on the Hong Kong Stock Exchange. Equity, fixed income, currency, and commodity derivatives trading are just some of the many products and services it provides.
Euronext
Euronext is a pan-European stock market that conducts business in a number of nations, including France, the Netherlands, Belgium, Portugal, and Ireland. The Amsterdam, Brussels, and Paris stock exchanges amalgamated to form it in the year 2000. There are more than 800 publicly traded companies on the exchange’s list, including well-known corporations like Air France-KLM and Heineken, as well as a variety of smaller companies. The exchange is a significant player in the European financial markets and provides a wide range of trading services and products, including equities, bonds, ETFs, and derivatives.
Those learning how to buy shares in Saudi Arabia also need to consider the fee structure of the stock brokers. Choosing an expensive broker without research might end up eating all your
profits or augmenting your losses. In addition to the purchase price of the shares you purchase, you may incur other fees such as transaction fees, monthly or annual account fees, cash withdrawal fees, foreign exchange fees, and inactivity fees. Some brokers also charge their clients the handling cost of shares.
Choosing the right broker with suitable trading instruments and fees that won’t hurt your profits or add to your loss is an important step. We’d like to add that eToro pricing structure aligns with industry averages and is ideal for beginners who want to buy stocks and engage in stock trading.
Pros
- High Growth Potential
- Dividends
- Diversification of Portfolio.
- Low-Interest Rates.
Cons
- Saudi Stocks are too Dependent on Crude Oil.
- Political and Economic Risk.
With so many brokers available, finding the best one for your needs can be overwhelming. A reliable and trustworthy broker will make buying and selling shares easier and provide you with valuable insights and advice to make informed investment decisions. In this guide, we’ll explore some key factors to consider when choosing a broker to buy shares from.
Regulations
When assessing an online broker to trade shares from, an important metric to consider is its regulations. Regulations add credibility to a stock broker and promise that your funds are handled with utmost care. A regulated stock broker has to adhere to standards set by a regulatory body. Therefore, always look for a regulated and authorised broker. Consequently, the regulations warrant that the way the stock broker trades with you is ethical and fair and saves you from any kind of fraud and scam.
Capital Market Authority (CMA) regulates and oversees the financial institutions dealing with security businesses in Saudi Arabia. It was established in 2003 as an independent governmental institution. It regulates the Saudi Arabian capital market.
The CMA’s role is to ensure that the capital market operates transparently, fair, and efficiently and to protect investors’ rights. Working towards achieving this goal, it regulates and oversees various aspects of the capital market, including the registration and supervision of market participants and the licensing of brokerage firms. Additionally, it supervises the approval of public offerings and prospectuses and enforces regulations and rules to maintain market integrity.
Markets
Tied to the growth of the country’s economy, the Saudi Arabian banking sector is one of the largest in the region. Al Rajhi Bank, and Saudi British Bank are some top shares to buy in the banking sector of Tadawul.
Another sector that investors can consider is the petrochemical industry. Saudi Arabia is a major oil and gas producer, and its petrochemical industry is among the largest in the world. Best shares to buy in petrochemical companies in Tadawul include Saudi Basic Industries Corp (SABIC) and Saudi Aramco.
In addition, Saudi Arabia has a growing healthcare sector and brokers allow investors to invest in companies such as Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO) and National Medical Care Company (CARE).
Likewise, clients can access shares in the Saudi Arabia stock market in sectors like healthcare, consumers, materials, telecommunication and technology. Medical Appliances Corporation (SPIMACO), Almarai, and Saudi Telecom Company are some good shares to buy.
Platforms
Most online brokers in Saudi Arabia provide desktop as well as mobile platforms. Narrow down your target platform to what you need before stepping into the myriad of platforms. Your choice of platform should be easy to use and secure. When considering how to buy shares in Saudi Arabia, look for a platform with low fees and commissions. Additionally, many stock brokers have top-notch trading platforms and apps that come in handy if you want to sell or buy stocks. Your best bet is to choose a broker that supports both a proprietary trading platform and a widely used platform, such as MT4 or MT5.
The user interface of a proprietary trading platform is much more likely to be user-friendly because it enables consumers to be more adaptable in the face of market fluctuations. Plus, it is designed keeping in mind the needs of that specific broker. In addition, these trading platforms frequently exist as web-based, desktop, and as mobile apps. In order to give their customers the highest level of service and make things as easy as possible for them, the finest brokers make their trading platforms accessible via all three methods. For example, eToro allows clients to access a web-based platform and mobile app according to their preferences and needs.
Offering
Real shares are the traditional way to invest in stocks. When you buy shares, you’re actually buying stocks in a public company which entitles you to dividends and other benefits associated with your ownership. This means that if a company does well, the value of its stock will rise, and you will benefit from capital gains. Nonetheless, real stocks can also be subject to risk as their stock prices can go down and up.
On the other hand, a CFD is a contract between two parties that allows you to speculate on the price of a stock without actually purchasing the underlying stock. With CFDs, traders can go long or short. That is, traders can take advantage of price increases or decreases. Additionally, CFDs are leveraged products. You can increase your exposure by buying a portion of the underlying stock’s price. When assessing how to buy shares in Saudi Arabia, choosing whether you want real shares or CFDs is important.
Online brokers allow their clients to buy real shares or share CFDs, sometimes both. We’d like to mention that eToro and Capital.com allow their clients to buy CFDs in the Saudi Stock market.
Trading Commission
The commission is typically a percentage of the trade’s value or a fixed fee per transaction. The trading commission brokers charge for trading stocks can vary greatly depending on the broker, the type of investment product being traded, and the trade size. It is worth knowing that the CMA has set a maximum commission of 0.3% for buying and selling shares in Tadawul, which is lower than the commission rates in many other markets. To buy shares, some stock brokers charge zero percent commission. Nevertheless, commission-free trading may come with other fees or restrictions. It’s also essential for investors to carefully read the broker’s fee schedule and terms of service to understand the trading commission and any additional costs that may be applicable. Notably, online brokers like eToro offer commission-free trading.
Stock brokers provide their custom-built and third-party platforms to buy shares online, offering a range of benefits to traders, including access to global markets, real-time data and analysis, trading tools and features, and flexibility.
Proprietary Trading Platforms and Apps
Proprietary trading platforms and apps are an exclusive offering of brokers to their clients. The user interface of these trading platforms is designed to be beginner-friendly and easy to navigate, ensuring that novice traders can quickly adapt to the platform without much hassle. At the same
time, the platform also provides advanced features such as order type customization, different chart layouts, and search tools to simplify the asset selection process for seasoned traders.
Moreover, brokers offer both desktop and mobile versions of these platforms, catering to the preferences of different traders. While some traders may prefer to use their PC’s vast storage and processing power, others may prefer to trade on the go using their mobile devices. The availability of both versions ensures that traders can access the trading platform from anywhere and at any time, allowing them to seize opportunities quickly and efficiently.
With a state-of-the-art desktop platform and intuitive mobile app, Evest and Capital.com are two top brokers on our list of popular CFD-only trading platforms to buy CFD shares in Saudi Arabia.
MT5 Platform & App
MetaTrader 5 is the most popular third-party platform most stock brokers provide to trade shares. It is a multi-asset platform with advanced charting tools, technical analysis features, and support for automated trading through Expert Advisors (EAs).
MT5 platform has proved to be a popular choice for stock brokers to offer to their clients. One of the key reasons for its continued success is the impressive execution speeds achievable on the platform.
Traders can benefit from real-time quotes, current market data, and charts, making buying shares a seamless and straightforward process. Additionally, traders can automate their trades using robots, signals, and fundamental analysis, adding to the platform’s appeal. When considering buying shares in Saudi Arabia while traveling, you can access the MT5 mobile app through your broker and start buying. The MT5 cellular platform gives 30+ technical signs and 24+ analytical gadgets offering an expert technical evaluation of stocks and alternate rates to its users to start trading seamlessly.
Investing in the right stocks can be a challenge, especially for novices. There are thousands of companies trading on stock exchanges, making it difficult to know which ones to put your money into. However, to put you at ease, this section of the guide provides you with our take on some of the best stocks to buy today.
Tesla
Headquartered in Palo Alto, California, Tesla, Inc. is a US-based company specialising in electric vehicles and clean energy. It is on the list of best shares to buy now due to its strong market position in the growing electric vehicle industry, which is expected to continue to grow due to increasing concerns about climate change and the shift toward renewable energy sources. The company has a market cap of 652.73 billion USD, and its stocks can be traded internationally through online stock brokers. Revenue refers to the amount of money a business receives from its customers in exchange for the sale of goods or services. Tesla’s revenue was $81.46 billion, for the 12 months ending December 31, 2022, a year-over-year increase of 51.35%.
Amazon
Since its IPO in 1997, Amazon’s stock has grown tremendously, making it one of the most valuable companies in the world. Amazon’s market cap as of February 17, 2023, is $996.03B. Moreover, Amazon’s final closing stock price on February 17, 2023, was $97.20. The all-time high closing price for Amazon stock was $186.12 on July 8, 2021. Likewise, Amazon’s annual revenue for 2022 was $513.983B which shows a 9.4% increase from 2021.
Nevertheless, with the company’s continued growth and expansion into new markets, Amazon’s stock remains a popular choice for investors looking for long-term growth potential.
Apple
With a market cap of $2.56 Trillion, Apple is one of the best shares to buy today. The company buys, designs, develops and sells consumer electronics, computer software, and online services. As of February 17, 2023, the closing stock price for Apple is $152.55. Apple’s stocks have been a popular investment choice for many investors over the years. All in all, the company’s stock has experienced significant growth, with an all-time high closing price of $182.94 on January 03, 2022. Apple’s annual revenue for 2022 was $394.328B, which shows a 7.79% increase from 2021.
Meta Platforms
Founded in 2004, Meta Platforms is a leading social media company running many subsidiaries. Meta’s stock has experienced significant growth since its IPO in 2012. Despite some controversies, the company’s stock has continued to rise, fueled by substantial advertising revenue and user engagement. Correspondingly, Meta Platforms’ annual income in 2022 was $116.69 billion, an increase of 1.12% from 2021. In 2021, Meta Platforms’ annual revenue was
$117.9 billion, an increase of 37.18% over 2020. As of February 17, 2023, Meta Platforms’ market cap is $448.22B. If we look at the price history of Meta stocks, the average Meta Platforms stock price for the last 52 weeks is $162.39. At the time of writing this article, the closing stock price for Meta Platforms is $172.88.
Saudi Aramco
Saudi Aramco is a Saudi Arabian multinational petroleum and natural gas company listed on the Tadawul stock exchange since December 2019. With a market cap of 7.22 trillion SAR, it is the world’s largest oil producer. Its initial public offering (IPO) was one of the most highly anticipated IPOs in recent history. Since its listing, the stock price of Saudi Aramco has fluctuated but has generally remained within a stable range. As of February 19, 2023, the stock price of Aramco is 32.80 SAR. ARAMCO recorded its highest price close of 42.35 SAR since its debut. Its worth noting that Clients can buy share CFDs of Saudi Aramco on platforms like Evest and eToro.
In Saudi Arabia, there is no tax to buy shares; however, traders can incur capital gains tax on the sale of shares. Non-residents need to pay the capital gains tax of 20% on the net gain realised from the sale of shares. However, certain exemptions and deductions are available, and the tax rate may vary depending on the type of shares and the duration of ownership. Additionally, the Zakat, an Islamic wealth tax, applies to buying and selling shares. Under Saudi Arabian tax law, individuals holding shares in Saudi Arabian companies must pay a Zakat tax of 2.5% on their shares each year. The tax is calculated based on the market value of the shares on the last day of the Zakat tax year.
Accordingly, when buying shares online or offline in Saudi Arabia, you will need to consider the tax levied on them.
Let’s see what users of two social networking platforms say about buying stocks in Saudi Arabia.
On Reddit, this user posted that the Saudi stock market is highly regulated by CMA, with many strict rules. Moreover, he mentioned that the stock’s price could not increase by more than 10% in its value on a trading day.
Quora
A user on Quora provided information on how to buy shares in Saudi Arabia. He commented about the procedure to buy American shares while living in KSA. He further added that stock trading carries risks, and you should carefully consider your investment goals and risk tolerance before buying shares.
Another user on the question commented that once you open an account with a Saudi broker, you can open a portfolio for the American stock market to buy stocks listed there.
Bottom Line
In this guide, to address how to buy shares in Saudi Arabia, we have proffered our readers a step-by-step guide. By learning the stock market basics, researching companies, choosing a brokerage, placing your order, and monitoring your investments, you can make smart investment decisions that help you achieve your financial goals. In short, doing your research and making informed decisions is essential.
Furthermore, many stock brokers provide CFDs and real shares to their users in various markets to buy. Users can access custom-built as well as third-party trading platforms through brokers. In addition, you need to know that buying shares in Saudi Arabia is tax-free. That being said, traders need to pay Capital gains tax when selling shares.
Q & A
Tesla, Amazon, Apple, Saudi Aramco and Al Rajhi bank are some of the best shares to buy in Saudi Arabia.
Due to regulatory requirements, eToro no longer offers its trading platform to Saudi Arabian clients.
Yes, you can buy Amazon shares in Saudi Arabia by signing up with an online broker offering access to international markets.
From an Islamic perspective, investing in stocks is permissible as long as the stocks invested in do not violate Islamic financial principles. This is not to say that investing in all types of stocks is halal. It is advisable to ask some authentic scholar before buying shares of a particular company.
As the world’s largest petroleum producer, Saudi Aramco is one of the top shares to buy in Saudi Arabia.
1. Apply for Investor Number (NIN).
2. Register with an online Stock Broker offering stocks in Tadawul.
3. Deposit Funds.
4. Select Saudi Aramco Shares listed in Tadawul.
5. Buy the Shares.
6. Monitor your Portfolio.
Yes, you can buy any international shares by opening an account with an online broker giving access to global shares.
Saudi Aramco, Al Rajhi Bank, Saudi Telecom Company (STC), Saudi Arabian Mining Company (Ma’aden) and Abdullah Al Othaim Markets Company are some of the good shares to buy in Saudi Arabia this year.
