More foreign investors eyeing Saudi market as holding limit eases: CMA chairman

Saudi Arabia’s decision to scrap the ownership limit for foreign strategic investors in listed firms came as more strategic ones are seeking to enter into the market, Mohammed El-Kuwaiz, chairman of Capital Market Authority, told Al-Arabiya TV on Thursday.

“We hope the new decision will allow more incentives to boost investor diversification in the local capital market, including strategic, financial, foreign and Saudi investors,” El-Kuwaiz said.

The number of foreign investors – including strategic partners -- rose to 7 percent in June 2019 from almost 4 percent in January, driven by the entry of financial investors and inclusion of Saudi Stock Exchange (Tadawul) in global emerging markets indices. 

The Kingdom opened the market for foreign investors in 2015 and focused on financial investors, such as asset and fund managers as well as investment firms.

According to CMA, a foreign strategic investor is a foreign legal entity that aims to own a strategic shareholding in listed companies in Saudi Arabia.

“Strategic investment conditions apply to all stocks listed in the Saudi capital market except for three categories only,” El-Kuwaiz continued.

“These categories are real estate firms with core investments in Makkah and Madinah. They also include companies that ban foreign investor ownership,” he added, noting that “these companies have started to amend their bylaws in line with the new rules.”

The third category includes companies under certain sectors such as banks, insurance and communications. Most of these businesses are subject to rules that limit ownership for Saudi and foreign investors.

The Saudi market regulator removed a cap on ownership of publicly traded companies for foreign strategic investors, Argaam reported.