New rules regulating foreign investment in Saudi Arabia's main financial market have entered into force, allowing foreign individuals and companies to invest in local securities, bonds, and funds, according to the regulations of the Capital Market Authority (CMA), as published in the Official Gazette on Friday.
These regulations, which generally exempt citizens of the Gulf Cooperation Council (GCC) countries, amend several previous frameworks, including the authorized persons regulations, the rules for qualified foreign financial institutions investment, and the investment accounts instructions.
Under the new rules, six categories of non-resident foreigners are now permitted to access the market.
The rules impose a maximum ownership limit of 10% for each non-resident foreign investor (excluding strategic investors), and a total cap of 49% for all foreign investors in any listed company. Additionally, foreign strategic investors are prohibited from selling their shares for two years following acquisition.
Comprehensive Reforms
This move is part of a broader set of capital market reforms. In July, the CMA’s board approved amendments to the investment funds regulations, real estate investment funds regulations, and the glossary of defined terms, aiming to update the regulatory framework in line with global best practices and to enhance transparency and market governance.
Managed Assets
In 2024, the CMA approved the launch of 44 new investment funds, including equity, money market, endowment, exchange-traded, and real estate funds.
By the end of last year, the total value of managed assets in the Saudi financial market exceeded SAR1 trillion for the first time, reflecting a growth of 20.9% compared to 2023.
The number of investment funds reached 1,549, and the number of subscribers in public and private funds rose to more than 1.72 million, an increase of 47% during the same period.
Saudi Arabia leads G20 countries in several global financial market indicators, according to the 2024 World Competitiveness Yearbook by the International Institute for Management Development (IMD).
Strategic Transformation
Head of Asset Management at Arbah Capital Mohammed al-Farraj said that the implementation of the new rules regulating foreign investment in the Kingdom’s main market represents a "strategic shift that enhances the attractiveness of the Saudi financial market and cements its position as a leading financial hub regionally and globally."
In remarks to Asharq Al-Awsat, al-Farraj said: “The Saudi market ... enjoys a competitive advantage over regional markets such as the UAE, Qatar, and Egypt, making it an appealing destination for long-term foreign capital.”
This openness aligns with the standards of developed market indices such as MSCI and FTSE, which could help attract more capital inflows and strengthen international confidence, he added.
He also told the newspaper that expanding investment opportunities to include bonds and investment funds in addition to equities "adds new depth to the market and boosts liquidity in debt instruments.”
This encourages global asset managers to enter through local platforms or establish joint funds.
Al-Farraj acknowledged that foreign investors may face challenges, such as "the time needed to understand the local regulatory framework and compliance requirements.”
