Opening of Tadawul: Australia welcomes Saudi Arabia’s reform

By liberalizing Tadawul, Saudi Arabia is demonstrating its willingness to make a down-payment towards achieving these objectives

Andrew Robb
Andrew Robb
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On the occasion of the opening of Saudi Arabia’s stock market – “Tadawul” – to foreign investors, I wish to commend Saudi Arabia’s economic policy-makers and investors for this significant economic reform. It presents new opportunities to consolidate economic and financial ties between Australia and Saudi Arabia, particularly if we can conclude a Free Trade Agreement between Australia and the Gulf Cooperation Council (GCC).

The opening will benefit Saudi Arabia’s domestic economy. By enhancing international linkages with foreign institutional investors, Saudi Arabia is able to increase the depth and liquidity of its stock market, and take advantage of a wide range of professional and technical skills available worldwide – including in Australia.

This measure will also benefit the wider region. With the largest stock market in the region, and a track record of financial stability, Saudi Arabia plays an important role in strengthening and stabilizing the global financial system. Tadawul’s opening allows it to be included in international stock market indices and provides new opportunities for institutional investors world-wide to diversify their portfolios.

By liberalizing Tadawul, Saudi Arabia is demonstrating its willingness to make a down-payment towards achieving these objectives.

Andrew Robb

Australia can make an important contribution to realizing the success of Tadawul’s opening. The Australian Stock Exchange (ASX) is one of the world’s oldest stock markets, with over 150 years of experience to share, including highly qualified administrators, regulators and investors. The ASX is also one of the largest stock markets in the Asia-Pacific region, with a market capitalisation of around $1.5 trillion. And with A$2.6 billion of funds under management, Australia’s fund managers come with global experience and world class expertise.

Free Trade Agreement

One important way in which Australia and Saudi Arabia – and indeed the wider Gulf region – will be able to draw on these resources and capitalize on Tadawul’s opening will be through the conclusion of a Free Trade Agreement between Australia and the member states of the GCC. Such an agreement would include important new protections and incentives for investors of capital between Australia and the GCC. It would also enhance opportunities for providers of financial, banking and accounting services to participate in each other’s markets. This would be a two-way process, with both sides able to benefit from increasing their participation in each other’s financial markets.

Read also: Australian trade minister: FTA with GCC ‘possible within months’

The Australian Government places enormous importance on enhancing these ties and concluding the Free Trade Agreement with the GCC. It is for this reason that I have visited the region three times, most recently in April 2015, in my capacity as Australia’s Trade and Investment Minister, including two visits to Riyadh. These visits have also allowed me to participate in the “Australia Unlimited” program show-casing economic opportunities between Australia and the Gulf region in trade, education, and tourism. Importantly, this program also focuses on opportunities in investment and financial services.

Australia and Saudi Arabia are both key members of the G20. Australia is proud to have initiated – during its G20 Presidency year in 2014 – the goal for G20 countries to raise their collective economic output by at least two per cent over the baseline forecasts for 2018. Achieving this goal will depend on the willingness of G20 members to implement the necessary reforms. By liberalizing Tadawul, Saudi Arabia is demonstrating its willingness to make a down-payment towards achieving these objectives.

Let me once again congratulate Saudi Arabia and its regulators and investors on the liberalization of Tadawul. I look forward to strengthening economic ties between our countries and the contribution Australia can play in the future development of Saudi Arabia’s financial sector and economic growth.

Andrew Robb MP AO is the Australian Minister for Trade and Investment.

Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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