Saudi Arabia intends to open its financial markets to any foreign investor starting February 1, the market regulator of the Gulf country announced on Tuesday, and it is simplifying the rules to draw in more foreign money.
The amendments adopted by the Capital Markets Authority eliminate the notion of the Qualified Foreign Investor, canceling a rule that admitted only international investors with immediate and regular access to the Saudi capital market.
In a statement, CMA said that the move will give investors globally an opportunity to make direct investments in the capital market, which would facilitate inflows and enhance the liquidity of the market.
Saudi Arabia, which is over halfway into an economic strategy to lessen its oil reliance, has been endeavoring to draw foreign investment, such as instituting exchange-traded funds with Asian associates in Japan and Hong Kong.
In the previous year, regulators also enabled foreigners to acquire listed companies that hold real estate in Mecca and Medina, without amending rules on direct land ownership.
JP Morgan was quoted as saying that it was forecasting that the effect of Tuesday would be minimal, “nearly all” institutional investors had already been given freedom to invest in the market.
In a note, JPM added, “As a reminder, the key regulatory change that investors are expecting is the change to the foreign ownership limits, which should have some positive impact on the market,” added that it did not anticipate that change to occur until after the second half of the year or later.
The Saudi stocks soared in September after the CMA was reportedly set to lift a 49 per cent limit on foreign ownership of listed companies, which could rejuvenate interest in the largest stock exchange in the Arab world.
Thus, LSEG data show that the Saudi benchmark index had dropped 12.8 percent last year and had declined 1.9 percent this year.
