Out-Law News 1 min. read

Saudi Arabian stock market to open to foreign investors from June


Foreign banks, insurers and brokers will be able to invest in and trade shares listed on Saudi Arabia’s stock exchange from 15 June, the country’s Capital Market Authority (CMA) has announced.

The CMA will publish final rules governing access to the country’s $530 billion stock market, known as the Tadawul, early next month to come into force on 1 June, according to the announcement. Access will be opened to pre-approved ‘qualified foreign financial institutions’ that have been given regulatory approval, the CMA said.

The regulator originally announced its intention to open up the market to foreign investors last year and has been consulting on draft rules. On its website, it said that it had “reviewed comments and observations received [on the proposals], coordinated with concerned governmental parties, and received the Saudi Stock Exchange (Tadawul)’s confirmation of its readiness”.

Currently, only the six states that form the Gulf Cooperation Council (GCC) have free access to the Tadawul. Foreign investors have been permitted to access the market through equity swaps and exchange-traded funds since 2008. The expansion forms part of Saudi Arabia’s plans to diversify its traditionally energy-intensive markets as the price of oil remains at a historic low: income from oil accounted for almost 90% of the country’s revenue last year, according to Bloomberg.

The final foreign investment rules are expected to set some restrictions on foreign ownership of Saudi Arabian company shares. The CMA’s draft rules, published for consultation on Augist, proposed restricting total foreign ownership of a single company’s stock to 49%, with a 5% cap on the amount that could be owned by a single financial institution.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.