Saudi Arabia Nears Removal of Foreign Ownership Cap on Listed Firms

Saudi Arabia's Capital Market Authority is finalizing regulatory changes to lift the 49% foreign ownership cap on listed companies, potentially before year-end. Board member Abdulaziz Abdulmohsen Bin Hassan confirmed the move, stating approval from other government bodies remains the final hurdle.

The reform could trigger immediate index adjustments, with MSCI likely to increase Saudi stocks' weighting in its Emerging Markets Index. Currently at 3.3%, the weighting WOULD rise significantly as foreign ownership restrictions currently depress Saudi equities' index representation.

This comes as Saudi stocks underperform regional peers, with Tadawul's main index down 9.6% year-to-date - the worst performance in the Gulf region. The proposed changes may attract fresh capital inflows, according to Amwal Capital Partners' CIO Fadi Arbid, who anticipates automatic index-driven buying if the cap exceeds 50%.