Foreign Financial Institutions can Invest in Saudis Stock Market From 2015


Published Date : Jul 24, 2014

Come 2015, foreign financial institutions will be able to make direct investments on the Arabian stock market. A report in the Saudi Gazette said Wednesday that ‘eligible’ foreign financial institutions will be allowed to invest in listed shares. This new move will come in effect before June 2014. The Saudi market currently stands capitalized at about USD 530 billion. The opening up of the world’s biggest oil exporter’s stock market is keenly anticipated by global investors. The country’s Capital Marketing Authority (CMA) said that in August, it will publish a document stating rules for participation in the Saudi Market and the qualifying parameters for the participating financial institutions from abroad. A statement to this effect was published on the regulator’s official website.

Presently, foreign financial investors can only purchase Saudi stocks via a handful of exchange-traded funds and international banks. Besides being expensive, these investments routes are also inconvenient. According to market estimates, only 5% of the Saudi Market is owned by foreign investors. Their stock trading turnover is even smaller.

There is a massive interest in investment from foreign entities given Saudi’s strong economy and blue-chip firms from the Middle East having a strong presence in the country. On Monday, the International Monetary Fund (IMF) raised the forecast for the growth of the Saudi economy to 4.6%.

In other smaller stock markets in the Gulf - such as Dubai - foreign investors own an estimated 15%. With Saudi opening up its stock market to foreign financial investors, market experts anticipate about USD 50 billion dollars to flow into the country.