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Saudi Arabia To Open Bourse To Foreign Investors In April

The Daily Capitalist, 1718 views

The Kingdom of Saudi Arabia mulls the possibility of opening its strict stock market to foreign investors in April 2015, says a report from Bloomberg. The information came from people who were involved in a private meeting where the Kingdom’s future plans were discussed, claims the report.

No Specific Date

The sources said the information was shared with them in London last November, when the Capital Market Authority (CMA) told fund managers and brokers about the plan. This goes in line with the earlier announcement of the KSA’s plan to open the bourse during the first half of 2015. Nonetheless, as of posting, no exact date has been announced yet from the CMA.

As far as the draft rules are concerned, there are no plans on making major changes to what was announced last August. The world’s biggest oil exporter could still possibly impose caps on the foreign ownership of a single stock. As per the August draft rules, this figure will sit at 49%. Qualified foreign investors (QFIs) may also see a limit to the amount of single stocks and the number of QFIs could also see a ceiling.

One of the World’s Strictest Markets

Up until now, Saudi Arabia owns one of the strictest stock markets around the world. Only domestic investors are allowed to pour money into the said bourse. The country does allow foreign investors, albeit very strictly. Only investors from the Guld Cooperation Council, which is composed of six nations, can participate in the trading.

Rumor has it that the Kingdom is opening its market to provide a USD130 billion boost to its non-energy sectors.

The Saudi Stock Exchange is also one of the world’s largest equity markets. In terms of size, it comes first in the Middle East and comes second to China.

Rise in Stocks

News about the possible April opening had a domino effect on the Saudi stock market. The country saw a 1.2% rise in its benchmark Tadawul All Share Index on Sunday, December 28.

Experts, however, see the oil price slump as a deterrent to the flow of investment in one of the emerging markets currently closed off to foreigners.

Among the firms that experienced the boost, two companies saw the largest increases. The first is the kingdom’s biggest lender by market value, the Al Rajhi Bank; while the second is the mining company Maaden. The former saw a 1.7% growth, while the latter had a 7.5% investment increase.