Saudi Arabia is set to introduce a landmark reform to its equity market by allowing foreign investors to hold majority stakes in publicly listed companies, a significant shift from the current 49% ownership limit. According to Abdulaziz Abdulmohsen bin Hassan, a board member of the Capital Market Authority (CMA), the decision is expected to be implemented before the end of 2025, pending final government approval.
A Strategic Move To Attract Global Capital
The removal of the foreign ownership ceiling is a strategic move designed to attract substantial international capital. A key anticipated outcome is an increased weighting for Saudi equities in major global benchmarks like the MSCI Emerging Markets Index, where the Kingdom’s market currently represents 3.3%. Such a reclassification would likely trigger significant passive investment inflows from index-tracking funds and encourage active fund managers to increase their exposure to Saudi companies.
Aligning With Vision 2030
This reform is a critical step in advancing the goals of Saudi Arabia’s Vision 2030. By opening the market to greater foreign participation, the Kingdom aims to enhance market liquidity, boost investor confidence, and accelerate the diversification of its economy away from a reliance on oil. The move strengthens Saudi Arabia’s position as a premier investment destination in the region and integrates its $2.3 trillion market more deeply into the global financial system.
Market Context And Investor Confidence
The policy change comes at a time when the main Saudi stock index has declined 9.6% year-to-date, underperforming regional peers amid geopolitical uncertainty and slower government spending. Despite this, foreign investors have shown sustained confidence, continuously increasing their holdings in the market, attracted by ongoing structural reforms and appealing valuations. Several firms, including the technology company Rasan and telecom operator Etihad Etisalat, already have foreign ownership levels exceeding 20%, indicating strong existing interest that is now poised for further growth.
About The Capital Market Authority (CMA)
The Capital Market Authority is the sole regulator and supervisor of the capital markets in the Kingdom of Saudi Arabia. The CMA’s primary objectives are to regulate and develop the Saudi Arabian capital markets by issuing required rules and regulations for the implementation of the Capital Market Law. Its functions include protecting investors from unfair practices and ensuring efficiency and integrity in the securities market.
Source: Waya
