Saudi Tadawul index surged on Thursday after the government relaxed the foreign ownership limit on companies listed on the bourse.

The Tadawul index rose as much as 8,798.55, before trading 1.19 per cent higher at 8,790.68.

According to a report, Saudi Arabia in a bid to attract foreign funds into the country, has removed the cap on FOL (foreign ownership limits) from the current 49 per cent.

“The relaxation on FOL for ‘strategic’ foreign investors has implications for certain specific stocks, where the foreign room was low and hence MSCI had a 0.5x adjustment factor,” Vrajesh Bhandari, senior portfolio manager with Al Mal Capital said.

On the back of buying due to the MSCI upgrading the Saudi equities to the emerging market index, the gauge has gained 11.5 per cent since January 1.

Bhandari of Al Mal Capital feels that the FOL hike would benefit a few companies.

“So now assuming the strategic stake is excluded from FOL computation, for Saudi British Bank and BUPA the weight in the Index would increase and therefore result in inflows. Another beneficiary would be Arab National Bank — which was completely excluded from the Index due to the 40% stake owned by Arab Bank,” he added.

Elsewhere in the Gulf, the Dubai Financial Market general index closed 0.13 per cent higher at 2,626.06. The Abu Dhabi Securities Exchange general index closed at 4,991.69, up 0.7 per cent.