S.Arabia stock exchange opens to foreigners

Saudi Arabia has opened up its exchange to large institutional investors who can now own up to 20 percent of any listed company on the Tadawul

S.Arabia stock exchange opens to foreigners

World Bulletin / News Desk

The Capital Markets Authority of the Kingdom of Saudi Arabia announced on Monday that its Riyadh-based Tadawul stock exchange is now open to foreign investment.

Institutional investors with five years of experience and more than $5 billion in assets under management may now acquire up to 20 percent of the shares in any listed company. Single foreign investors may own up to 49 percent in the majority of stocks on the exchange -- a few are restricted to Saudi nationals.

The Tadawul stock exchange is the largest in the Middle East with a market cap of more than $500 billion.

In a statement published on May 4, a spokesman for the exchange said that many observers expected the entrance of foreign investors in the market through investing in listed companies would be gradual since some investors would wait until the market is included on the global indices.

It is expected that the number of QFI – qualified foreign investors -- investing in the Saudi market will increase after that, the statement said.

MSCI, the benchmark stock index provider, expects to examine the market for inclusion in its regional indexes. This could be an important step to attract capital to the exchange.

The exchange’s spokesman said that the objectives of this move are: To promote institutional investment through the entrance of specialized foreign investors in the Saudi Capital Market which would contribute in market stability and reduce volatility; to raise the level of research; to enhance market efficiency and to improve the level of transparency, financial information disclosure and governance practices; to transfer the knowledge and expertise of professional investors to market participants by attracting highly professional experts; to raise the market's rating so that it can be classified as an emerging market under the global indices.

Güncelleme Tarihi: 15 Haziran 2015, 11:58