By Soren Billing
EFG-Hermes gets go-ahead to offer trade swap arrangements to non-residents.
EFG-Hermes has become the latest securities brokerage to offer foreign institutional investors access to the Saudi Arabian market, through its Abwab product.
The Egypt-based regional investment bank has been granted permission to provide non-resident foreign investors with the ability to purchase Saudi Arabian equities through trade swap arrangements.
“Saudi Arabia is the second most liquid emerging market worldwide and the positive steps being made towards its liberalization not only present investors with exciting opportunities, but also provide the Saudi market with increased liquidity and a potential reduction in volatility,” Matthew Wakeman, managing director, said.
Foreign investors were unable to invest in individual Saudi stocks until August this year, when the Capital Markets Authority (CMA) announced that “authorised persons” in the Kingdom are able to enter into swap agreements with non-resident foreign investors.
The Tadawul accounts for over 25 percent of MENA Market Capitalization and over 40 percent of all MENA traded value.
It has a market capitalisation of $390 billion and an average daily traded value of $2.5 billion.
Rival banks Morgan Stanley and Deutsche Bank already offer investors access to the Saudi market through their subsidiaries, Deutsche Securities Saudi Arabia and Morgan Stanley Saudi Arabia (MSSA).