Saudi Arabia set to open stock market to foreigners in April

Saudi Arabia, the world's biggest oil exporter, is planning to open its local stock market Tadawul to foreign investors as soon as April 2015, Bloomberg reported yesterday quoting three people familiar with the matter.

In July Saudi Arabia announced that it would open the stock market to foreigners in the first half of next year. According to the source, the country's regulator, Capital Market Authority (CMA) informed brokers and fund managers of the timeline in London last month.

CMA had brought out draft regulations in August for opening up of the stock market, under which foreign investors with at least 18.75 billion riyals ($5 billion) of assets and minimum of five years experience in the business will be permitted to participate in stock trade. Reports said the regulator may lower the assets requirement to 11.25 billion.

Also, there could be a cap on foreign ownership of a single stock at 49 per cent and also qualified foreign investors (QFIs) will have a ceiling of 5 per cent ownership in a single stock, according to the draft rules.

The Saudi stock exchange, with a market capitalisation of around $509 billion, is the biggest bourse in the Middle East, dwarfing the exchanges in Dubai, Abu Dhabi and Doha. The authorities are removing the barriers to one of the world's most-restricted major stock exchanges.

Currently, only investors from the six Gulf Cooperative Council (GCC) nations can participate in the stock exchange. Others can access it only indirectly through equity swaps and exchange-traded funds.

According to experts, the move could bring in as much as $35 billion in foreign cash.

A spokesman for the CMA, not to be identified, also said yesterday that the regulator continues to expect the market to open to foreign investors in the first half of next year, though no specific date is set.

The country's benchmark Tadawul all share index has risen 31 per cent in the first three quarters but dived 34 per cent in the subsequent months up to mid-December due to slump in oil prices. The biggest company in Tadawul is the Saudi Basic Industries Corporation (Sabic), which represents the country's petroleum industry and is worth $74 billion.

Further to the news, the Tadawul all share index was up 1.2 per cent yesterday to end at 8,856.38.