Saudi Arabia is weighing a major shift in foreign ownership rules that could scrap current limits on listed firms.
Markets reacted strongly, with the Tadawul All-Share Index surging more than 5 per cent, its biggest gain in five years.
The Kingdom’s Tadawul All-Share Index saw $3.86bn of trades on Wednesday, a near 200 per cent increase on the 90-day average.
Saudi foreign ownership rules
Top gainers for the day were Alimna, Dar Alarkan the Tadwal Group and Gasco, which all increased just under the maximum 10 per cent.
It comes after a Bloomberg report stated Saudi Arabia is looking at easing the limits on foreign ownership of listed companies.
Reports this week said the Capital Market Authority is looking at scrapping rules limiting the foreign ownership of listed companies. The CMA is said to be considering allowing foreign investors to own a majority share in a listed company, overruling current limits of a maximum 49 per cent.
According to Bloomberg the new rules could be implemented before the end of 2025.
The strong market reaction to the news illustrates a hunger for investment in the region. While currently foreign investors have been limited to owning minority shares of companies in Saudi Arabia, the CMA decision could change that and signal a rush to invest.
Analysts at JP Morgan and EFG Hermes said incoming investments could top $10bn if rules are changed.
Edward Bell, Acting Group Head of Research and Chief Economist at Emirates NBD said: “Saudi Arabia is reportedly considering raising the foreign ownership limit of listed stocks to more than the current 49 per cent, according to statements from a board member of the Capital Market Authority.
“An increase in the share of allowable foreign ownership would increase the attractiveness of listed equities in Saudi Arabia to more passive investors and increase its share in global benchmark indices”.
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