Saudi market opening to foreign investors seen boosting liquidity

Saudi Arabia’s stock market will open to all categories of foreign investors on Feb. 1, allowing direct investment in the Main Market (TASI), in line with a previously announced decision by the Capital Market Authority (CMA), analysts told Argaam.

Following the move, any foreign investor—individual or institutional, resident or non-resident—will be able to access the Saudi equity market directly through a licensed brokerage, without the need for special regulatory frameworks or complex classifications.

Analysts told Argaam that opening the Saudi market to all foreign investors is a key step toward boosting market appeal and liquidity, though its initial impact is expected to be gradual and selective.

Mohammed Al Suwayed, chief executive of Razeen Capital, said the Saudi market is likely to see a clear pickup in activity and liquidity next week, with a positive bias in performance, as a new segment of foreign investors—both individuals and institutions—enters the market.

He added that the impact is unlikely to trigger a broad-based rally, and will initially be concentrated in blue-chip and highly liquid stocks, with deeper effects expected to emerge gradually as new investor inflows stabilize.

Separately, Saad Althagfan, an economic analyst and board member of the Saudi Economic Association, said next week’s trading will be a real test of market reaction to the full opening. He noted the market had already risen by about 10% following the announcement, supported by higher oil prices and corporate earnings, particularly in the banking sector.

Previous restrictions lifted

Previously, foreign access to the Saudi market was largely limited to qualified foreign investors (QFIs) or via swap agreements.

Althagfan said the removal of these restrictions has contributed to a more positive view of the decision among both local and foreign investors.

Al Suwayed said the previous frameworks had limited foreign participation and slowed capital inflows.

New decision: Direct access with broader scope, ownership limits remain

According to a previous statement by the CMA, the decision allows foreign investors to enter the market without qualification requirements, abolishes the regulatory framework governing swap agreements, and permits direct investment in shares listed on the Main Market.

However, opening the market does not eliminate foreign ownership limits in listed companies, as some firms remain subject to maximum foreign ownership caps under their regulations.

Al Suwayed said the move represents a structural shift in the trajectory of Saudi Arabia’s capital market, noting that large institutional inflows are likely to materialize gradually, given the time institutions require to build positions and complete operational and regulatory arrangements.

He added that some stocks close to foreign ownership limits may see different trading dynamics, while Althagfan said those caps will keep the impact selective across certain companies.

Market impact and initial outlook

Al Suwayed said a tangible improvement in liquidity is expected from the first week, with the impact set to build further over the coming weeks and months.

Althagfan said capital inflows are likely to be gradual, with the potential for stronger inflows should foreign ownership limits be raised in the future.

Sectors and expected inflows

Al Suwayed said the banking sector is expected to be among the main beneficiaries, citing its large size, clear business models and high liquidity.

Althagfan added that healthcare, real estate and technology sectors are also well positioned to benefit, supported by regulatory reforms and rising demand for their services.

International interest led by Asia, Europe

Al Suwayed expects the strongest interest to come from the UK, the US and Europe, particularly through global funds and asset managers.

He added that individual investors from countries such as Egypt, Jordan and Pakistan may enter the market more quickly following the removal of barriers, though their impact is expected to be more visible in trading activity and volumes, rather than as a major source of large institutional inflows in the initial phase.

Separately, Althagfan said the Saudi market is likely to attract growing interest from East Asian investors, particularly China, alongside investors from the Americas, Europe and the UK, citing the market’s scale, depth and position as the largest in the region.