Saudi Arabia’s equity market has been formally opened to all categories of foreign investors, a move widely expected to attract substantial international capital inflows in the coming period.
The decision follows the entry into force, on Sunday, of a new regulatory framework allowing non-resident foreign investors to invest directly in the Saudi stock market.
Market experts say the reform could draw global funds seeking exposure to the Kingdom’s largest listed companies and fast-growing economy.
By the end of the third quarter of 2025, foreign investors’ ownership in the Saudi capital market exceeded SAR 590 billion ($157.3 billion). Investments in the main market alone stood at around SAR 519 billion ($138.4 billion), up from SAR 498 billion ($132.8 billion) at the end of 2024, underscoring steady growth even before the latest reforms. Analysts expect the new rules to further boost foreign participation.
On Sunday, the Saudi Capital Market Authority announced that the market would be fully open to all foreign investor categories from February 1, following approval by its board of the new regulatory framework. With this step, all segments of the Saudi market are now accessible to investors worldwide through direct investment.
Market performance, however, was mixed. The benchmark index recorded its strongest monthly gain since 2022 in January, closing at 11,382.08 points.
On the first day of foreign investors being allowed to trade directly, the index fell 1.9 percent to 11,167.48 points, losing 214.6 points amid broad declines, particularly in energy, banking, and basic materials stocks.
Leading stocks
Hamad Al-Olayan, chief executive of Villa Capital, said the initial decline was “natural,” noting that several major stocks had posted strong gains in recent days following the announcement of the decision last month.
Speaking to Asharq Al-Awsat, he attributed the pullback largely to profit-taking in leading stocks such as Maaden.
Al-Olayan also pointed to pressure on banking shares, especially Al Rajhi Bank and Saudi National Bank, after recent rallies, as well as volatility in gold and silver prices.
Some investors may still be unclear about ownership limits and sector-specific restrictions, he added.
Outlook improves
The recent decline may also reflect psychological factors, profit-taking, and limited geopolitical pressures, he remarked. Sentiment would improve once procedures for foreign entry, account opening, execution, and ownership thresholds become clearer.
The reforms abolish the concept of the “qualified foreign investor” in the main market and cancel swap agreements previously used by non-resident investors to gain only economic exposure. Direct ownership of listed shares is now permitted.
In July 2025, the CMA had already eased account-opening procedures for certain foreign investors, a transitional step toward full liberalization.
The latest changes align with the authority’s gradual approach to opening the market and aim to position Saudi Arabia as a global investment destination while supporting the domestic economy.
