RIYADH - The Saudi Capital Market Authority clarified the most important developments and events witnessed by the financial market in the Kingdom of Saudi Arabia, and the procedures and legislation taken by the Authority to develop the financial market by working to further stimulate the entry of foreign investors, in light of the tasks entrusted to it in accordance with the Capital Market Law and the regulations and regulations that are specialized in its application.

The Capital Market Authority has made many efforts and measures to raise the attractiveness of the Saudi financial market and enhance the entry of foreign investors directly or indirectly, starting by allowing resident foreign investors to invest in the Saudi stock market directly in the year 2006 AD and not limiting foreign investors’ investment to investment funds, and in 2008 it was allowed For non-resident foreign investors to invest in securities through swap agreements with one of the brokerage firms licensed by the Authority, and in 2015 AD, the Capital Market Authority allowed non-resident foreign investors to invest directly by launching the rules governing the investment of qualified foreign financial institutions in listed securities. In the same year, the authority began a plan of amendments aimed at increasing the market’s attractiveness to foreign investors and opening new horizons for the financial market through several initiatives, most notably the amendment of the time period for settling transactions of listed securities to be after two working days (T+2), and the application of international accounting standards Issued by the International Accounting Standards Board (IFRS) on listed companies in the Saudi financial market.

In 2016, the Capital Market Authority amended the rules regulating the investment of foreign financial institutions in listed securities by easing the qualification requirements in order to expand the investor base to include government agencies and institutions affiliated with government agencies and reduce the size of the minimum required value of assets managed by the institution requesting qualification to be 3.75 billion riyals or more instead of 18.75 billion riyals. The update of the rules regulating foreign financial institutions’ investment in listed securities is in line with the authority’s efforts to develop the financial market and expand the institutional investment base. The authority has also implemented several major reforms, including allowing non-resident foreign investors to invest directly in the market Parallel (Nomu) in 2017.

At the beginning of 2018, the Saudi Capital Market Authority issued its second update of the rules regulating the investment of qualified foreign financial institutions in listed securities, which included allowing the qualification of financial institutions affiliated with the qualified foreign investor or the foreign portfolio manager and the investment funds managed by them without the need to submit independent applications. The modernization would facilitate the conditions for qualification and speed up its procedures by canceling the requirement of review and registration of the Capital Market Authority for the qualified foreign investor, and easing some requirements for the continuous commitment of the qualified foreign investor, and the minimum requirement. In 2019, the Saudi stock market joined the emerging market indices Morgan Stanley (MSCI), FTSE and Standard & Poor's (S&P), which contributed to the increase in financial flows from foreign investors and their ownership in the Saudi financial market.

The Authority continued to increase the attractiveness of foreign investment in the Saudi market, by allowing strategic foreign investors to own a strategic stake in listed Saudi companies by launching instructions regulating foreign strategic investors' ownership of strategic stakes in listed companies.

As a result of these efforts, the value of foreign investors’ ownership in the Saudi financial market increased by more than 150% by the end of the second quarter of 2021 AD compared to the end of 2018, and the banking, basic materials, energy and communications sectors achieved the most foreign investment sectors. 

The Authority confirmed that these efforts have a tangible positive impact by increasing foreign cash flows in the Saudi financial market, encouraging foreign investors to contribute positively to the financial market, and opening the way for them to invest and save through their ownership of securities listed in the Saudi financial market, which contributed to raising the attractiveness and efficiency of the market. to foreign investors.

The Authority seeks to contribute to achieving the goals of the Kingdom’s Vision 2030 through the Financial Sector Development Program, which aims to create an attractive environment for all categories of local and international investors alike. The entry of foreign investors into the Saudi financial market aims to deepen the financial market by increasing liquidity levels, and stimulating Saudi companies. Listed on raising the level of disclosure, in addition to activating the role of its investor relations department, and contributing to increasing coverage of Saudi companies listed by local financial professionals in global think tanks, in addition to increasing opportunities for business growth of authorized persons, by entering a new segment of investors to the Saudi financial market .