Saudi stock market to open to foreigners as planned

Saudi Arabia said it’s on track to open the Arab world’s biggest stock market to foreigners in the first half of the year, confirming no change of policy since a new monarch ascended to the throne following King Abdullah’s death.

The Capital Markets Authority has issued draft laws and is assessing investor feedback before it approves the regulations and sets an official date for the lessening of restrictions on the about $485 billion exchange, governor Mohammed Al-Sheikh said at a conference in Riyadh. King Salman pledged on Friday to maintain the oil-rich nation’s current policies and asserted all ministers will stay in their posts.

Abdullah, who on January 23 passed away aged about 90, helped drive a 27 per cent stock rally in the past four years with a $130 billion spending plan. The market regulator’s comments underscore the kingdom’s commitment to its economic plans as it seeks to boost non-oil industries amid plunging crude prices. The Tadawul All Share Index rose 0.7 per cent in its first day of trading following the late king’s death, the largest increase among Gulf stock markets.

The feedback process “indicates that there is genuine and significant demand and interest in the Saudi market,” Mr Al-Sheikh said at the Riyadh conference.

Investors from outside the six-nation GCC aren’t allowed to invest directly in stocks and have to get access to the market through equity swaps and exchange-traded funds. Saudis accounted for 95.05 per cent of the value of Saudi shares traded in December, with other GCC nations at 2.08 per cent and others 2.87 per cent, according to bourse data.

“Markets can hence expect continuity from Saudi Arabia in the near term,” VTB Capital said in an emailed note on January 23. “King Salman is thought to be more conservative than his predecessor, but also has a reputation of being a consensus builder in the royal family.”

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