Saudi curbs on foreign investment to be further eased this year

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Saudi Arabia’s Capital Market Authority (CMA) is reportedly accelerating efforts to further ease restrictions on foreign investors, according to Saudi Gazette.

The Saudi market regulator in May announced plans to allow foreign investors to own larger stakes in listed companies as part of new regulations it expected to implement by mid-2017.

The Saudi newspaper, quoted an interview given this week by CMA Chairman Mohammed al-Jadaan to The Wall Street Journal, in which he hinted at the possibility of preponing the implementation of the decision to this year instead of June 2017 as announced earlier.

“It might be in this year,” he said in the interview. Jadaan also added that public consultation on the proposed changes concluded last week, and the new rules could be published by the end of September.

The amended rules include lowering the minimum value of assets foreign institutions are required to manage to qualify to invest in the Saudi stock market. The same-day trading settlement system at the stock market will be replaced instead by clear trades within two working days, which is preferred by foreign investors.

In June 2015, the Kingdom opened up to international institutional investors allowing them to buy local equity, a move intended to help attract more foreign capital and reduce its dependence on oil revenues.

Saudi Arabia plans to list up to 5 per cent of its state-owned company on global stock exchanges, including, its main bourse at home. Saudi Aramco itself is estimated to be worth between $2 trillion and $3 trillion, which means the initial public offering could potentially raise $100 billion to $150 billion.

“We want to make sure the whole ecosystem is prepared for it,” Jadaan said, adding, “We will be thrilled to have Aramco come to the market.”

A media report said international interest in the kingdom’s listed companies has so far been lukewarm. Currently, foreign investors own under 1 per cent of the market by value.