According to reports from Bloomberg, Saudi Arabia is seeking to open its $509 billion Saudi Stock Exchange or Tadawul to foreign investors in April of 2015. Saudi’s Capital Market Authority (CMA) informed brokers and fund managers of the timeline in London last month, two of the people said, asking not to be identified as the meeting was private.
The country announced in July that it would open the market in the first half of 2015, but now we know April is the target timeline. Saudi Arabia isn’t planning significant changes to draft rules published in August, the people said.
Draft rules include:
– Minimum of 18.75bn riyals ($5bn) of assets under management and at least five years experience in the business will be eligible to trade in Saudi stocks
– The Riyadh-based regulator may cap foreign ownership of a single stock at 49%
– 5% limit for qualified foreign investors, or QFIs, in a single stock, and a 20% ceiling for QFIs and approved QFI clients combined
– QFIs’ holdings may not exceed 10% of the market’s value, including interests under swaps.
*Currently, investors from outside the Gulf Cooperation Council (GCC) are not allowed to own shares directly and have to tap the market through equity swaps and exchange-traded funds (ETFs).
Major firms listed on the Saudi bourse include Kingdom Holding, Prince Alwaleed bin Talal Al Saud’s investment vehicle; Al Rajhi Bank, the largest Islamic lender; and Saudi Basic Industries (Sabic), the world’s biggest petrochemicals producer.
The benchmark Tadawul All Share Index has added 6.95%, year-to-date for 2014. You can see the index fell hard from its peak alongside the slide in oil prices. Still, the index has since recovered to post a single digit gain for the year. (View chart below, courtesy of Bloomberg).
2014 Tadawul All Share TASI Index Chart. Saudi Stock Market trading hours are 11AM to 3:30PM, Sunday to Thursday.
The world’s biggest oil exporter is removing barriers to one of the world’s most-restricted major stock exchanges as it pursues a $130 billion spending plan to boost non-energy industries. A spokesman for the CMA said today 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.