Saudi stock exchange to open doors to foreign investors in H1

The $509 billion Saudi stock exchange or Tadawul is likely to be opened to foreign investors in April, three people briefed on the Kingdom’s plans were quoted as saying by Bloomberg on Sunday.

The Capital Market Authority (CMA) informed brokers and fund managers of the timeline in London last month, two of the people told Bloomberg.

No significant changes to draft rules published in August are being considered, the people said.

The Kingdom announced in July that it would open the market in the first half of 2015. The Riyadh-based regulator may cap foreign ownership of a single stock at 49 percent, according to the August draft rules. 

It may also set a five percent limit for qualified foreign investors, or QFIs, in a single stock, and a 20 percent ceiling for QFIs and approved QFI clients combined, it said. 

The QFIs’ holdings may not exceed ten percent of the market’s value, including interests under swaps, according to the draft rules.

A spokesman for the CMA said the regulator continues to expect the market to open to foreign investors in the first half of next year, though no specific date has been set.

Saudi’s exchange is currently limited to domestic investors and foreigners from the six-nation Gulf Cooperation Council. 

Saudi Arabia is the biggest stock market outside China, where domestic shares are excluded from MSCI’s global gauges because of limits on foreign investors, according to data compiled by Bloomberg. 

The United Arab Emirates’ exchanges, along with Qatar’s, began trading as emerging markets after index provider MSCI reclassified them in June 2013.

The CMA drafted a proposed set of rules for international investors more than a year ago, requiring a minimum $5 billion of assets under management and a five-year operating history. 

The rules, designed to limit speculative inflows, would also cap investment in local companies, a person with knowledge of the matter said in May.