Saudi Arabia to ease restrictions on foreign investment

The Saudi Capital Market Authority (CMA) yesterday announced measures to ease restrictions on foreign investment in the local stock market starting from 23 January.

According to the updated reforms, the Saudi Capital Market Authority reduced the minimum required value of assets under management needed for a foreign institution to qualify as an investor in the stock market by half, to become $500 million instead of $1 billion.

Saudi Arabia’s market authority previously reduced the amount from $5 billion to $1 billion in 2016.

It also abolished the investment’s restrictions by allowing eligible foreign enterprises to acquire a larger stake of up to ten per cent of the shares of any issuer, instead of five per cent.

All foreign investors, whether residents or non-residents, are allowed to own more than 49 per cent of shares of any issuer with shares listed on the stock market, unless the company’s Articles of Association or any other regulation states that foreigners may not do so.

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In June 2015, Saudi Arabia allowed foreign institutional investors to buy domestic stock directly, aiming to attract more foreign capital, reduce its dependency on oil revenues and accelerate its inclusion to the Emerging Markets Index (MSCI).

The Saudi Stock Exchange is the largest in the region by market value, and it includes 180 companies, distributed across 20 sectors.

The project is part of Bin Salman’s 2030 economic vision for the country, which he has also promised will come with modernisation.