How Does the Extension of Trading Hours on 'Nasdaq' Affect the Saudi Stock Market?

SadaNews - In a move that could redraw the map of capital flows worldwide, the American "Nasdaq" stock exchange has decided to extend its trading hours to 23 hours a day, aiming to attract new categories of investors from around the globe.

Although the decision is still awaiting regulatory approval, questions have been raised among traders and analysts in Saudi Arabia regarding the impact of this step on the financial market in the Kingdom (Tadawul), given the historical connection of Saudi investors to the American markets. Saudi trades in U.S. exchanges reached 583 billion riyals in the first nine months of this year.

Saeed Al Thuqfan, a board member of the Saudi Economic Association, points out that this figure includes only trades conducted through brokers licensed by the Capital Market Authority, noting that it represents about 58% of transactions in the Saudi stock market during the same period. If we include traders directly through non-local brokers, it would double to an unknown level.

The Saudi financial market faced a challenge in 2025 due to a liquidity shortage injected by participants in local stocks, as the average daily trading values during the first nine months of the year did not exceed 5.5 billion riyals, compared to 7.99 billion riyals during the same period in 2024. The total trading values dropped to 1.01 trillion riyals during the first nine months from 1.47 trillion riyals in the same period last year.

"Nasdaq", the second-largest stock exchange in the United States, wishes to add a trading session from 9 PM to 4 AM Eastern Time and expects to be ready to launch the extended trading in early Q3 of 2026, pending necessary regulatory approvals.

Attractiveness of American Stocks

The overlapping trading hours between markets typically excite individual investors to try entering new exchanges. Ishaq Ali, the acting CEO at "Winstone" Financial in Saudi Arabia, believes that American stocks, in particular, hold significant appeal for Saudi investors, especially the seven famous technology giants: Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, and Nvidia, which collectively achieved returns exceeding 156% over the past two years. "These stocks have even become a financial equation for an exciting, thrilling, and fast-paced drama that one cannot stop following," he states.

Data from the Saudi Capital Market Authority indicates that American stocks are already attracting interest from Saudi traders, comprising nearly 99% of their investments in global financial markets. Their trading value in U.S. exchanges during the third quarter of this year exceeded 216 billion riyals, while their trades in Gulf financial markets during the same period did not exceed 685 million riyals.

Saudi trading in American stocks has shown continuous growth since it was at 86 billion riyals in Q1 2022, reaching its highest level in Q3 2025 at 216 billion riyals, representing a 141% annual increase.

Risks of Evening Sessions

Ghassan Al Dhakir, the CEO of Ma'yar Financial, warns Saudi traders that entering the American market opens up increasing possibilities for making undisciplined investment decisions, considering the distraction and higher competition with global institutions and algorithms.

The nature of evening trading sessions also involves increased risks for traders, imposing technical challenges related to execution risks and pricing quality. Trading hours outside of official sessions tend to feature less market depth and wider price spreads between bids and asks, as affirmed by Mohammed Al Farraj, Senior Director of Assets Management at "Arbah Capital".

He notes that this requires investors and wealth managers to adopt a more professional approach, moving away from emotional impulses behind sharp price fluctuations, and instead focusing on using limit orders to avoid price slippage that could negatively impact profits, especially given the lower liquidity characterizing these periods compared to the primary session, which experiences peak institutional activity.

Junaid Ansari, head of the Investment Strategy and Research Department at "Kamco Invest", agrees with the warnings concerning pricing shares during evening sessions, noting that the risks are concentrated in small-cap stocks in the U.S., which may experience higher volatility during nighttime sessions and could be subject to price manipulation due to limited volume and wide bid-ask spreads.

Temporary Transition to "Nasdaq"

According to Saeed Al Thuqfan, the interest of Saudi traders may be limited to certain categories without a significant impactful transfer of investors to "Nasdaq", because "the Saudi market is attractive and its company profits are growing, with earnings multiples lower than the U.S. market," in his assessment, predicting a return of funds to the Saudi stock market after a period of experimentation in the U.S.

The impact of extending trading hours on "Nasdaq" is expected to be limited on long-term investors, according to Ghassan Al Dhakir, as investors will stay where distributed returns, clear regulatory vision, and an economy that they understand and live within its details are available.

Meanwhile, Ansari from "Kamco" anticipates that trading volumes for individual investors from Saudi Arabia in "Nasdaq" will increase, especially around major events such as earnings seasons and data announcements in the United States.

Opportunity to Attract Foreign Funds to the Saudi Market

The temporal overlap between the two markets not only means an increase in flows from Saudi investors toward American stocks, but it may also represent an opportunity to attract funds in the opposite direction, especially given the easing of restrictions on foreign funds in "Tadawul".

The Saudi Capital Market Authority is set to review foreign investor ownership limits in the stock market during the year 2026, as revealed by its chairman, Mohammed Al-Qwaiz, at the end of October last. He stated that any decision regarding the repeal or amendment of the current ownership cap (set at 49%) will depend on the results of a regulatory analysis.

Al Farraj from "Arbah Capital" confirms that this deep temporal overlap enhances the attractiveness of the local investment environment by aligning it with international standards, which may stimulate the flow of foreign capital searching for markets with a dynamic response to global changes. He adds: "Although there are technical possibilities for a partial leak of active liquidity toward the American market in search of quick profit opportunities, the ultimate outcome remains in favor of strengthening the depth of the Saudi market through the innovation of local investment products and exchange-traded funds that connect the two markets, thereby creating a comprehensive financial system that serves pricing efficiency and long-term investment stability."