Saudi stock market capitalized at more than $500 billion
Officials revealed plans last year to allow direct foreign investment in Saudi-listed entities in the first half of 2015, publishing draft rules in August for public consultation, which would allow the kingdom to attract hundreds of millions of dollars in foreign cash as it pushes to diversify its petrodollar-dependent economy by boosting the private sector.
On Thursday, the Saudi Capital Market Authority said the final rules regulating direct foreign investment will be published on May 4 and come into effect on June 1, after which the market will open to foreign investors “The CMA has reviewed comments and observations received in this regard, coordinated with concerned governmental parties, and received the Saudi Stock Exchange (Tadawul)’s confirmation of its readiness,” the regulator said.
The Saudi Tadawul, one of the last big markets globally to limit international access, lists some of the largest companies representing various sectors in the region, including petrochemical giant Saudi Basic Industries Corp., or Sabic. Saudi Arabia is also among the most active initial public offering markets in the region. Last year, its biggest local lender, National Commercial Bank, raised $6 billion in the largest share sale ever in the Arab world. To that extent, foreign investors seeking access to the region will be able to invest in a stock market that is more representative of the real economy than many of its regional peers. It is, however, still not clear what exact limits the regulator will have in place for foreign investments.
Saudi Arabia in 2008 began allowing foreign investors indirect access to the market through swaps, but it has hesitated to open the market fully. A sharp fall in oil prices since the middle of last year raised investor hopes of such a move, as analysts reckoned the kingdom would need the cash as it spends hundreds of billions of dollars locally to build infrastructure and create jobs.
Extract from The Wall Street Journal