Saudi Arabia has relaxed a 49% limit for foreign strategic investors in shares of listed companies, aiming to attract billions of dollars of foreign funds as the Kingdom opens up the region's largest bourse to a more diverse investor base.
The Riyadh-based Capital Market Authority said there are no maximum or minimum limits on the ownership of listed companies for foreign strategic investors, according to a statement on Wednesday after trading hours.
The instructions do not apply to qualified foreign investors, according to another document on the CMA website.
Saudi Arabia, increasingly, is open for business, not just for local investors but for international investors, it is ironic that Saudi is rapidly opening up and embracing the world in a period when the rest of the world seems to be closing down"
Mohammed El-Kuwaiz, the Saudi Capital Market Authority Chairman, said: "Saudi Arabia, increasingly, is open for business, not just for local investors but for international investors, it is ironic that Saudi is rapidly opening up and embracing the world in a period when the rest of the world seems to be closing down."
The Saudi stock market, which opened to foreign investors in 2015, has seen an upsurge in foreign fund flows since the start of the year due to its inclusion in the emerging markets indexes.
"In the beginning of this year, we had only 1% ownership in the Saudi capital market by financial investors, today it is over 3%, that's more than a threefold increase," Mohammed El-Kuwaiz told Reuters in an interview.
"Our hope is that we can see a similar increase in terms of pace and magnitude as we start to create more avenues for foreign investors to come in to the market," he added.
Kuwaiz said huge demand from non-financial foreign investors pushed the CMA to grant approval on an exceptional basis to a number of strategic foreign investors to increase their holdings in Saudi listed companies. These included transactions at an insurance firm and a local bank.
While the CMA has removed the cap, limits by other regulators or a company's own rules still apply.