DUBAI—Saudi Arabia’s regulator on Thursday issued a set of draft rules for foreigners ahead of the long-awaited opening of its $580 billion stock market to international investors next year.
The Capital Markets Authority said a qualified foreign investor must be a bank, brokerage, fund manager or insurance company with at least $5 billion in assets under management, a requirement aimed at attracting more stable and experienced institutional investors.
The draft rules set a 5% ownership limit for any individual investor in a single listed company and a collective 20% ceiling for qualified foreign investors.
“The maximum proportion of the issued share of any particular issuer whose shares are listed that may be owned by all foreign investors (in all categories, whether residents or non-residents) in aggregate is 49%, including interests under swaps,” the CMA said.
A final version of the rules is expected to be published after a three-month consultation period with banks, government officials and other market participants.
Saudi Arabia, the biggest economy in the Arab world, is one of the last large international markets to remain largely off-limits to foreign investors. In 2008, the kingdom began allowing foreign investors indirect access to the market through swaps, but it has hesitated to open the market fully.
But last month, the regulator said it was working on rules to lift those restrictions, potentially paving the way to draw in hundreds of millions of dollars.
Foreign investors have been waiting eagerly for more access to the region’s biggest and most liquid market, especially after two much smaller peers, Qatar and the United Arab Emirates, were upgraded to emerging-markets status by index compiler MSCI in May. Inclusion of a country’s stocks in MSCI’s indexes automatically draws in funds from investors who track the benchmarks.
Saudi Arabia’s stocks are worth more than the other three open regional emerging markets—Egypt, Qatar and the U.A.E.—put together.
Write to Nicolas Parasie at [email protected].
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(via WSJ Blogs)