Saudi Arabia sets foreign access rules for US$572b market

[DUBAI] Saudi Arabia has finalized rules for direct foreign investment as it prepares to open one of the world's most restricted stock markets on June 15.

The Riyadh-based Capital Market Authority will allow institutional investors with a minimum of 18.75 billion riyals (US$5 billion) under management to invest directly in the stock market, according to the regulations published on its website on Monday. The CMA has restricted foreign ownership of a single stock to 49 per cent. The rules will be enacted June 1, the regulator said in a statement last month.

The world's biggest oil exporter is giving foreigners access to its stock market as it pursues a $130 billion spending plan to boost non-energy industries. Income from oil accounted for almost 90 per cent of revenue last year. Investors from outside the six-nation Gulf Cooperation Council currently access Saudi-listed shares through equity swaps and exchange-traded funds.

The kingdom's Tadawul All Share Index has risen 17 per cent so far this year, the best performer among seven major gauges in the six-nation Gulf Cooperation Council. Saudi Arabia may be added to MSCI Inc's emerging markets index by 2017 at the earliest, accounting for about 4 per cent of the index Sebastien Lieblich, executive director at MSCI Index Research, said in July. The regulator published the draft rules in August.

Tadawul is home to Saudi Basic Industries Corp, the world's biggest petrochemicals producer by sales, Kingdom Holding Co, the investment vehicle of billionaire Prince Alwaleed bin Talal Al Saud. Al Rajhi Bank, the largest Islamic lender globally, also trades on the exchange.

BLOOMBERG