Competitive Analysis of Top 25 Financial Brokerages in KSA
Financial & Operational Performance, Future Plans and Recent Developments
September 2020
14
About the Report
About the Report
The publication titled ‘Competitive Analysis of Top 25 Financial Brokerages in KSA - Financial & Operational Performance, Future Plans and Recent Developments’ undertakes analysis of the Saudi Arabia Capital Market Trading Industry, Business Model & revenue streams adopted by key players, Trading Channels used by participants, Investor’s Overview (Retail & Institutional) and Industry’s Future Potential.
With more than 200 companies listed as of December 2019, Saudi Arabia is governed by one stock exchange i.e. Tadawul. In February 2017, the government of Saudi Arabia launched parallel equity platform “NOMU” platform with lighter listing requirements & serving as an alternative to small scale companies wanting to go public. For a long time the trading market in the , country was informal in nature. It was only in 2003, the government established Capital Market Authority, the regulator of the market and thereby leading to the establishment of Saudi Stock Exchange Tadawul in 2007. With a market cap of SAR 9 Tn, Tadawul is the largest exchange in Middle East region and ranks among top 10 exchanges in the world.
Lagging Behind Other Countries in Product Offerings:
However, when compared to other emerging countries Tadawul still lags behind in terms of different trading segments being offered to its customers. It was in July 2020 that the market allowed trading of derivatives, starting off with Futures Contract. This earlier limited the investor’s diversification capacity thereby forcing it to invest in conventional alternative investments. Providing a solution to its consumers, Brokerage Houses in the country offer investment opportunities in international markets of US, Europe and some of Asian Pacific countries as well. Perhaps due to high brokerage and international duty charges, affordability becomes an issue for investors.
Launch of Aramco- biggest ever IPO and Derivative products:
In 2019, Aramco raised USD 25.6 Bn by launching country’s biggest ever IPO surpassing China giant Alibaba. The trust in state owned oil company attracted many first time investors to the market, recording a growth of ~15% and taking total number of individual investors to 5.47 Mn. With institutional & non institutional investments pouring in market recorded growth of >300% in market capitalization making Tadawul as the largest stock exchange in the region.
In an attempt to increase sophistication of domestic capital market, Saudi Arabia announced the launch of Derivatives Trading. With derivative trading being very rare in Middle Eastern markets, the development is expected to attract retail investors from GCC and other international countries. Keeping in mind the product complexity and safety of retail investors, the government also launched the Saudi Clearing House.
Highly Fragmented Competitive Landscape
Competitive landscape in Saudi Arabia Financial Brokerage Industry is observed to be highly fragmented with ~70% of market share occupied by top 25 players being led by Al Rajhi Capital, NCB Capital, Aljazira Capital, HSBC Saudi Arabia and others. With prevalent uniform brokerage commission the companies compete on parameters including international markets offered, advisory services, Investment products, trading channels offered. With majority of trades being placed via online channels, major players have been investing on the development of Online trading channels & mobile based platforms.
KSA Financial Brokerage Industry Future Growth Potential
Analysts at Ken Research estimate the industry to grow at a CAGR of ~10% in next 5 years; attributable to increased retail participation, new trading products introduction and increased foreign & institutional participation. With markets hitting lows during COVID period, there has been a surge in new account openings and increased trading activities. Key industry players are expected to further invest in trading channels development, offering research & technical analysis tools and diversify product portfolios by offering more international market opportunities.
Companies Covered
Al Rajhi Capital
NCB Capital
Aljazira Capital
Samba Capital
Saudi Fransi Capital
Derayah Capital
Riyad Capital
HSBC Saudi Arabia
Alistithmar Capital
ANB Invest
Albilad Investment
Alinma Investment
EFG Herms Saudi Arabia
Merrill Lynch KSA Co.
Falcom Financial Services
Morgan Stanley
Alawwal Invest
Deutsche Securities Saudi Arabia
Al Khair Capital
Jadwa Investment
Arbah Capital
Emirates NBD Capital
Audi Capital
GIB Capital
Citigroup Saudi Arabia
Time Period Captured in the Report:-
- Historical Period: 2015–2019
- Forecast Period: 2020-2024
Key Topics Covered in the Report:-
Industry Overview- Key Trading Statistics for Equity, Sukuk & Bonds, ETFs and Mutual Funds
Investor’s Overview
Trading Summary-Value, Volume & Number of transactions, Online Trading and Sukuk & Bonds Trading statistics across top 25 players
Operational Indicators- Number of Individual Clients & portfolios, Online traders, AUM, Customer Acquisition Cost, Net Adjusted Working Capital and Number of Investment Centres for top 25 players
Pricing parameters for local & International Stock Exchanges
Financial Indicators covering Total Revenue, segmental Revenue, Operating Expenses, Operating Profit, Net Profit across top 25 players
Products
Products
Time Period Captured in the Report:-
- Historical Period: 2015–2019
- Forecast Period: 2020-2024
Companies
Companies Covered
Al Rajhi Capital
NCB Capital
Aljazira Capital
Samba Capital
Saudi Fransi Capital
Derayah Capital
Riyad Capital
HSBC Saudi Arabia
Alistithmar Capital
ANB Invest
Albilad Investment
Alinma Investment
EFG Herms Saudi Arabia
Merrill Lynch KSA Co.
Falcom Financial Services
Morgan Stanley
Alawwal Invest
Deutsche Securities Saudi Arabia
Al Khair Capital
Jadwa Investment
Arbah Capital
Emirates NBD Capital
Audi Capital
GIB Capital
Citigroup Saudi Arabia
Table of Contents
Table of Contents
1. Research Methodology
2. Industry Overview- Overall Trading statistics – Equity (Value of Shares Traded, Number of Transactions, Number of Shares Traded, Daily Average Number of Transactions, Daily Average Value of Shares Traded, Daily Average Number of Shares Traded, Market Capitalization), Trading statistics – Sukuk & Bonds (Value Traded, Number of Trades), Trading statistics – ETFs (Value Traded, Volume Traded, Number of Transactions), Trading statistics- Mutual Funds Public & Private Ownership (Number of Funds, Number of subscribers, Asset Base), Public Funds by Investments (Money Markets, Equities, REITs, Real Estate, Holding, Debt Instrument, Balanced, ETFs and Other)- Number of Funds, Number of Subscribers (as of Dec 2019), Value of assets, Private Funds by Investments (Equity, Real Estate, Multi-Assets, Debt Instrument, Money Markets, Financing, Commodities, Hedge & Derivatives, Feeding)- of Funds, Number of Subscribers (as of Dec 2019), Value of assets
3.Investor's Overview- Total number of Individuals (Male Investors, Female Investors), Number of individual portfolios, Values and Percentages of Ownership by Investor Type (Institutional Investor, Non-Institutional Investor), Values and Percentages of Ownership by Investor Type- Equity [Saudi Non-Institutional- High Net worth Investors (HNWI), Retail; Saudi Institutional- Individual Professional Investors, Individual DPMs, Corporate, Mutual Funds, Government Related Entities (GREs), Institutional DPMs); GCC Non- Institutional (Individuals), GCC Institutional- Institutions, GCC DPMs; Foreigner Institutional- SWAP Holders, QFI's, Strategic Partners, Foreign DPMs; Foreigner Non-Institutional (Foreign Residents)], Number of Owners and Ownership Values in Listed Sukuk and Bonds by Owner Type- Individuals, Companies, Government and Quasi- Government Entities, GCC Funds; Traded Values Classified by Market (Geographically)- Local Market, GCC Markets, Arab Markets, Asian Markets, USA Markets, European Markets, Other Markets); Discretionary Portfolio Management (DPM) Classified by Type of Investments- Local Shares, International Shares, Debt Securities, Investment Funds and Others; Margin Lending for Share Trading- Direct margin (Extended directly by an AP to the client) including No. of clients, Margin commitment, Outstanding balance, Indirect margin (Extended by a third party through an AP) including No. of clients, Margin commitment, Outstanding balance
4. Companies Overview- Year of Establishment, Type of Brokerage (Bank/Non-Bank), Scope of Services - Domestic vs International Trading, Operations, Recent Development, Future Plans
5. Trading Summary- Equity (Main Market) including Value of Transactions, Market Share (%) basis Value of Transactions, Volume of Transactions, Market Share (%) basis Volume of Transactions, Number of Transactions, Market Share (%) basis Number of Transactions; Online Activities (Main Market) including Online Value of Transactions, Market share (%) basis Online Value of Transactions, Online Volume of Transactions, Market Share basis Online Volume of Transactions, Online Number of Transactions, Market Share (%) basis Online Number of Transactions; Sukuk & Bonds including Sukuk & Bonds Value of Transactions, SAR Mn Market Share (%) basis Sukuk & Bonds Value of Transactions, Sukuk & Bonds Volume of Transactions, Market Share (%) basis Sukuk & Bonds, Volume of Transactions, Sukuk & Bonds Number of Transactions, Market Share (%) basis Sukuk & Bonds Number of Transactions for 2015-2019
Pivot Chart Analysis showcasing following relationships- Online trading as a percentage of total value traded – Including Industry Benchmark, Broker wise Average Trade Size, Broker wise Average Transaction Size Offline and Average Transaction Size Online, Market Share basis Value Traded for Equity & Sukuk/Bonds
6. Operational Indicators- Number of Individual Clients, Number of Individual Portfolios, Number of Online Traders, Assets Under Management, Marketing, Development and Promotion Cost, Employee Benefit Expense, IT and Communication Expense, Per Customer Acquisition Cost, Net Adjusted Working Capital, Working Capital Turnover Ratio, # of Investment Centres (Centre, West, East) for year 2019
Pivot Chart Analysis showcasing following relationships- Number of Individual Clients & Customer Acquisition Cost, Number of Individual Clients & Online Traders, Annual Value Traded and Net Adjusted Working Capital and Broker wise Regional Concentration of Investment Centres
7. Pricing- Local Saudi Arabia Market - Equity (% of traded value), Local Saudi Arabia Market – ETFs, Local Saudi Arabia Market - Sukuk & FI Bonds (% of traded value), Dubai Financial Market – Equity, NASDAQ Dubai, Abu Dhabi Securities Exchange – Equity, Qatar Exchange Index (DSM)- Equity, Bahrain Boursa – Equity, Muscat Securities Market- Equity, Boursa Kuwait – Equity, US (Equity), US (Derivatives), Egypt Stock Exchange – Equity, Amman Stock Exchange-Equity, London Stock Exchange-Equity, Frankfurt stock Exchange-Equity, Euronext Paris-Equity, Borsa Italiana-Equity, SWISS Exchange-Equity, Brussels Stock Exchange-Equity, Luxembourg Stock Exchange-Equity, Euronext Dublin-Equity, Euronext Amsterdam-Equity, Stockholm Stock Exchange-Equity, Tokyo Stock Exchange, Stock Exchange of Hong Kong and International-Sukuk & Bonds
8. Financial Indicators- Total Revenue, Market Share basis Revenue, Revenue from Brokerage, Asset Management, SAR Million Other Revenue, Total Operating Expense, Operating Profit, Operating Profit Margin, Net Profit, Net Profit Margin (%) for 2015-2019
Pivot Chart Analysis showcasing following relationships- Total Revenue & Operating Expenses, Revenue Mix- Segmental revenue from Brokerage, Asset Management & Others, Operating Profit Margin, Net Profit Margin with Industry Benchmark, Top 10 players value contribution vs Top 10 players revenue contribution, AUM and Asset Management Revenue, Year of Establishment, Market share in value Traded and Revenue
9. Companies Covered- Al Rajhi Capital, NCB Capital, Aljazira Capital, Samba Capital, Saudi Fransi Capital, Derayah Capital, Riyad Capital, HSBC Saudi Arabia, Alistithmar Capital, ANB Invest, Albilad Investment, Alinma Investment, EFG Herms Saudi Arabia, Merrill Lynch KSA Co., Falcom Financial Services, Morgan Stanley, Alawwal Invest, Deutsche Securities, Al Khair Capital, Jadwa Investment, Arbah Capital, Emirates NBD Capital, Audi Capital, GIB Capita and Citigroup Saudi Arabia
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