Amended draft rules for foreign investment in securities enable new investment types: CMA official

The Capital Market Authority's (CMA) Deputy for Listed Companies and Investment Products, Abdullah Bin Ghannam

The Capital Market Authority's (CMA) Deputy for Listed Companies and Investment Products, Abdullah Binghannam, regulatory frameworks that encourage steady investment flows are being developed in a way that strengthens the role of the capital market in achieving the Saudi Vision 2030 goals.

This comes at a time when foreign investment continues to inflow strongly into the Saudi market, Binghannam said in a statement.

The increase in foreign ownership in the stock market is mainly driven by the successive efforts made by the authority. This is besides the continuous development of regulations and enablers that prompted foreigners to invest in Saudi stocks, he noted.

The amended draft rules for foreign investment in securities included allowing new categories of foreign institutional investors to enter the Saudi stock market, Binghannam said, adding that the amendments lure foreigners to invest in Saudi Arabia through licensed asset managers in the Kingdom.

One of the objectives of attracting foreign investors to the market is to transfer knowledge and expertise to local financial institutions and investors. This is in addition to raising the professionalism of market participants by strengthening the role of institutional investors in Tadawul.

Moreover, CMA aims, through the new amendments, to stimulate investments, while boosting the attractiveness and efficiency of the financial market and increasing its competitiveness regionally and internationally.

This will, in turn, not only bolster market liquidity but will also reinforce the authority’s role in supporting the local economy. This is by attracting new foreign capital, especially through share offerings, according to Binghannam.

He added that CMA has been working with Saudi Tadawul Group Holding Co. (Tadawul Group) to make the Saudi market much more appealing by developing its mechanisms, services and products, in line with the top international practices.

In addition, the authority has made several efforts and taken many actions to enhance the attractiveness of the Saudi stock market and entry of foreign investors, directly or indirectly.

This included allowing resident foreign investors to directly inject investments into the market, along with permitting them to invest directly in debt instruments. The authority also introduced the Qualified Foreign Investor (QFI) program, through which international investors enjoy direct access to the Saudi stock market, said the official.

According to Binghannam, these measures and reforms taken by CMA led to a series of inclusions and upgrades to the stock market on global indices that are tracked by international investment funds. Tadawul joined key global indices for emerging markets such as MSCI, FTSE Russell and S&P Dow Jones.

Ownership of QFIs jumped by 1,944% from SAR 13.7 billion at the end of 2018 to SAR 280 billion by Q3 2022-end, thanks to Tadawul's inclusion in main indices of emerging stock markets, according to the official.