Saudi Capital Flees Home Market for US Stocks

Saudi Arabian investors significantly amplified their trading in US equities throughout 2025, shifting capital away from a struggling domestic market. By the fourth quarter of 2025, trading in US stocks by Saudi financial institutions reached approximately 254 billion riyals ($68 billion), more than doubling compared to the previous year.

This considerable shift occurred as activity on the Saudi exchange, the Tadawul, experienced a marked contraction. Total domestic trading volume decreased substantially from early 2024 to the end of 2025. The Tadawul All Share Index reflected this downturn, registering a 9% drop in the fourth quarter and a 13% annual decline for 2025, attributed to oil price volatility, fiscal pressures, and regional tensions.

In stark contrast, US markets demonstrated robust growth, with the S&P 500 index climbing over 16% for 2025. This performance was primarily driven by the technology sector and investor excitement surrounding artificial intelligence. Despite reductions in its holdings of US-listed equities by the Public Investment Fund, it has continued to deploy substantial capital into the US, including significant acquisitions.

Saudi Arabia's once-vibrant IPO market has also cooled, marked by weak initial public offerings and a slow start to new listings in early 2026. Concurrently, the US is preparing for a new wave of substantial IPOs, with companies like SpaceX potentially launching the world's largest. Even as local investors reduce their equity allocations, Saudi regulators are actively working to attract foreign capital by opening the market and considering rule changes for majority foreign ownership.