Saudi Arabia to open capital market to all foreign investors from next month

Dubai: Saudi Arabia has removed long-standing restrictions on foreign participation in its stock market, opening the door for all overseas investors to trade directly on the kingdom’s main exchange as it steps up efforts to revive inflows and support a market that struggled last year.

The Saudi Capital Market Authority said on Tuesday it has eliminated the framework that required foreign investors to meet specific eligibility thresholds before accessing the main market, including a minimum assets-under-management requirement of $500 million.

The changes abolish the “Qualified Foreign Investor” classification for the main market and will allow any category of foreign investor to participate without needing to satisfy prior approval criteria. Non-resident investors will be able to trade directly from February 1, according to the regulator.

The move represents one of the most significant liberalisation steps since Saudi Arabia first opened its equity market to overseas investors in 2015. It comes as authorities seek to reinvigorate trading activity and attract international capital after the Tadawul All Share Index fell nearly 13% last year, underperforming most major emerging markets.

Saudi Arabia’s push for foreign inflows has taken on greater urgency as elevated government spending and weaker oil revenues deepen budget deficits, raising concerns over the pace of domestic investment and funding for large-scale development projects.

“The approved amendments eliminated the concept of the Qualified Foreign Investor in the Main Market, thereby allowing all categories of foreign investors to access the market without the need to meet qualification requirements,” the capital markets regulator said in a statement.

Market participants have been anticipating a shift in policy for months. Saudi stocks rallied in September after reports that foreign ownership limits could be eased. Those gains later reversed when regulators said policymakers had not yet decided whether to remove the cap outright or increase it gradually as part of a 2026 review.

Tuesday’s announcement refocuses attention on foreign participation at a time when the Saudi market is seeking momentum.

Analysts said the move lowers entry barriers and widens the investor base, which could revive interest in Saudi stocks and support higher foreign ownership limits, with knock-on effects for global index inclusion and capital flows.

“Our index team calculates that a foreign ownership limit increase from the current 49% to a range of 60% to 100% could attract between $3.4 billion and $10.2 billion of passive inflows from MSCI and FTSE index trackers,” said Naresh Bilandani, managing director of equity research at Jefferies International.

While the regulator has not announced changes to the existing foreign ownership cap, the removal of qualification requirements marks a structural shift that could broaden the investor base and deepen liquidity in the Middle East’s largest equity market.

- With inputs from Agencies