RIYADH: The reforms have generated huge foreign interest with Saudi stock market’s Tadawul All-Share Index (TASI) rising 17.44 percent so far this year, the best performer among seven major gauges in the GCC.
Among stocks listed on the Tadawul are Saudi Basic Industries Corp., the world’s biggest petrochemicals producer by sales, and Al-Rajhi Bank, the largest Islamic lender globally.
“Investors should receive well the announcement as it signifies the country’s commitment to opening up the market,” commented John Sfakianakis, Middle East director at Ashmore Group.
“The details of the announcement are within what was expected and discussed over the last few months,” he told Arab News.
The rules, which take effect on June 1 ahead of the market’s planned opening on June 15, permit only qualified foreign investors (QFIs) such as banks, brokerages, fund managers and insurance companies with at least $5 billion in assets under management to invest in the Saudi stock exchange.
Foreigners will be able to own up to 49 percent of a single stock and institutional foreign investors with a minimum of SR18.75 billion ($5 billion) under management will be allowed to invest directly in the stock market, the CMA said in regulations published on its website on Monday.
The CMA has coordinated with the Saudi Arabian Monetary Agency (SAMA) and the Saudi Stock Exchange to allow foreign investors to open bank accounts and create a joint database to ensure account requirements are met, spokesman Abdullah Al-Kahtani said in an e-mailed statement.
Before issuing the final rules, the regulator received more than 500 comments on the draft copy from 33 local and foreign lawyers and investors, he said.
TASI added 0.2 percent on Monday ahead of the CMA announcement. SABIC was the main support, rising 1.3 percent.
“The impact is profound with many positive facets.” said Fawaz H. Alfawaz, a Riyadh-based economic consultant and a columnist.
“It should give rise to better governance in the Saudi listed companies and beyond as the international focus is likely to push for more transparency and disclosure, and sounder management practices,” he told media.
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