Saudi Arabia Mulls Rule Changes to Widen Foreign Investor Access

  • CMA says it will announce `ambitious' strategies in the future
  • Foreign investment flows into Saudi equities have been muted

Saudi Arabia may soften the rules for foreigners seeking to own stocks in the kingdom as the country aims to boost liquidity on the Arab world’s biggest bourse.

The Capital Market Authority is studying the possibility of allowing institutional foreign money managers with less than 18.75 billion riyals ($5 billion) under management to own shares in the country, Chairman Mohammed Al-Jadaan said at a press event in Riyadh on Wednesday. The regulator is also considering changing rules around initial public offerings to help boost the number of institutional investors in the market, he said.

OPEC’s biggest oil exporter is gradually removing barriers to one of the world’s most-restricted major stock exchanges as it seeks to diversify its economy away from energy. Since opening the market to direct foreign investment in June -- subject to strict rules -- 11 overseas investors have applied for and received licenses, Al-Jadaan said.

The CMA is also studying the introduction of other products like real-estate investment funds, Al-Jadaan said, and it will announce “very ambitious strategies" in the future.

Investment flows into Saudi equities since the market opened to foreigners has been muted so far. Investors with a QFI license bought stocks valued at 8 million riyals in July, according to data on the stock exchange website. On average, investors cumulatively traded about 4.8 billion riyals per day that month, according to data compiled by Bloomberg.

The Tadawul All Share Index has dropped 6.6 percent this year.

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