Saudi Arabian stocks retreated the most in more than a month after OPEC’s biggest oil exporter opened its equity market to direct foreign investment for the first time.
The Tadawul All Share Index fell 0.9 percent to 9,561.70 at the close in Riyadh after earlier swinging between gains and losses. Saudi Basic Industries Corp., the world’s top petrochemicals manufacturer by sales, led the drop with a 1.6 percent decrease. Al Rajhi Bank, the lender with the biggest weighting on the benchmark index, followed with a 1.2 percent decline.
As of Monday, approved investors from outside the six-nation Gulf Cooperation Council can own Saudi stocks directly, as King Salman pushes ahead with efforts to diversify the Arab world’s biggest economy away from oil. Saudi Arabia’s market is worth more than all the other major GCC markets combined.
“Those investors won’t be in the market until October,” Mohammed Al-Suwayed, a Riyadh-based financial analyst and partner at SPT Investors LLC, a market-analytics company, said by phone. “It will take a while to get their applications approved by the Capital Market Authority.”
The Riyadh-based CMA last month published regulations allowing foreigners access starting today. Investors from outside the GCC previously gained entry through equity swaps and exchange-traded funds.
Direct trading is restricted to institutional investors with a minimum of about $5 billion in assets under management and at least five years of experience. Holdings in a single equity for one qualified foreign investor are capped at 5 percent, while QFIs holdings in a single stock is capped at 20 percent. All in all, QFI holdings won’t exceed 10 percent of the whole market.
Foreigners -- both resident and non-resident -- will be able to own as much as 49 percent of a single stock.
The rules “will evolve as we go forward,” Adel Al-Ghamdi, the chief executive officer of the stock exchange, said in an interview in London. “Nothing is set in stone.”
Saudi stocks have increased 15 percent this year, the most in the Arab world. While the gauge is trading above its 100- and 200-day moving averages, it dropped below the 50-day measure. About 193 million shares changed hands, compared with a one year daily average of 286 million.
((An earlier version of this story corrected the attribution in the fourth paragraph.))