Saudi stock market set to open to foreigners in first half as planned

28/01/2015 05:32 AST

Saudi Arabia said it’s on track to open the Arab world’s biggest stock market to foreigners in the first half of the year, confirming no change of policy since a the new king ascended to the throne following King Abdullah’s death.

The Capital Markets Authority has issued draft laws and is assessing investor feedback before it approves the regulations and sets an official date for the lessening of restrictions on the about $485bn exchange, governor Mohammed al-Sheikh said at a conference in Riyadh yesterday. King Salman pledged on Friday to maintain the oil-rich nation’s current policies and asserted all ministers will stay in their posts.

Abdullah, who on January 23 passed away aged about 90, helped drive a 27% stock rally in the past four years with a $130bn spending plan. The market regulator’s comments yesterday underscore the kingdom’s commitment to its economic plans as it seeks to boost non-oil industries amid plunging crude prices. The Tadawul All Share Index rose 0.7% in its first day of trading following the late king’s death, the largest increase among Gulf stock markets. The feedback process “indicates that there is genuine and significant demand and interest in the Saudi market,” al-Sheikh said at the Riyadh conference.

Investors from outside the six-nation Gulf Cooperation Council aren’t allowed to invest directly in stocks and have to get access to the market through equity swaps and exchange-traded funds. Saudis accounted for 95.05% of the value of Saudi shares traded in December, with other GCC nations at 2.08% and others 2.87%, according to bourse data.

The largest Arab economy is seeking to open the stock exchange in April, three people briefed on the country’s plans said in December. Opening the market may prompt MSCI to include the bourse in its emerging market gauge by 2017, luring as much as $40bn of foreign cash, Schroders said in July.

“Markets can hence expect continuity from Saudi Arabia in the near term,” VTB Capital said in an e-mailed note on January 23.

Bloomberg