Saudi Arabia has taken a bold step to energise its equity market by opening its stock exchange to all foreign investors, removing long-standing entry restrictions in a move aimed at attracting fresh international capital. The decision marks a significant shift in market access policy and signals the Kingdom’s intent to deepen foreign participation in the Middle East’s largest stock market.
The Saudi Capital Market Authority (CMA) announced that it has eliminated all qualification requirements previously imposed on foreign investors wishing to trade in the Saudi market. Most notably, the regulator has scrapped the concept of the Qualified Foreign Investor (QFI) on the main market, a framework that once required institutions to meet strict criteria, including managing at least $500 million in assets.
Under the new rules, all categories of foreign investors will be able to access the Saudi stock market directly starting February 1. According to the CMA, the amendments are designed to simplify market entry, broaden the investor base, and enhance the attractiveness of Saudi equities to global capital.
The move comes at a critical time for the market. The benchmark Tadawul All Share Index declined by nearly 13 per cent last year, underperforming many major emerging-market peers. By lowering barriers to entry, regulators are seeking to revive trading activity and restore momentum to the market.
Foreign ownership in Saudi equities already stands at a meaningful level. As of the end of September, overseas investors held more than SR590 billion worth of shares, representing roughly $157 billion, with the vast majority invested in companies listed on the main index. Authorities expect the latest reforms to bring in additional international inflows and strengthen market liquidity.
The need for foreign investment has become increasingly important as government spending remains elevated while oil revenues fluctuate, placing pressure on fiscal balances. A more open equity market is seen as a key channel for attracting long-term capital to support economic growth and sustain investment momentum.
Market participants believe the decision could also support Saudi Arabia’s busy initial public offering pipeline. Dozens of companies are currently seeking approval to list on the exchange, with applications continuing to rise. Expanding the pool of potential investors could improve valuations and demand for new listings, further deepening the market.
Commenting on the reforms, investment professionals have described the move as a milestone not just for Saudi Arabia, but for the wider region. By lowering entry barriers and welcoming a broader range of investors, the Kingdom is expected to inject renewed interest into its equity market and strengthen its position within global investment portfolios.
Attention is now turning to the possibility of further easing foreign ownership limits. Analysts suggest that any increase in caps could unlock significant passive inflows from global index-tracking funds, potentially adding billions of dollars to the market. After a challenging year, the latest announcement brings renewed focus and optimism to a market that is clearly seeking its next phase of growth.