Rule change widens access, but investors still eye 49% cap for real upside
Saudi Arabia will let all foreign investors buy its stocks directly from 1 February, scrapping “Qualified Foreign Investor” rules in a move that could shift how global portfolios access the Gulf’s biggest market.
According to Reuters, the Capital Market Authority (CMA) removed the “Qualified Foreign Investor” framework and rules that restricted direct access to select institutions with consistent exposure to the Saudi market.
Bloomberg reported that the regulator also dropped thresholds that required foreigners to meet specific criteria, including at least US$500m in assets under management, clearing the way for non-residents to trade on the main exchange from 1 February.
The CMA said the changes aim to broaden the investor base, support inflows and improve liquidity, as reported by Reuters.
Foreign investors’ holdings already exceeded 590bn riyals by end-Q3 2025, up from 498bn riyals at the end of 2024.
Saudi equities reacted immediately.
Bloomberg reported that the Tadawul All Share Index jumped as much as 2.5 percent, its biggest intraday gain since September, after the announcement.
Reuters said the benchmark ended the day 1.6 percent higher, led by financials, communication and consumer staples, with Al Rajhi Bank and Saudi National Bank rising 3.4 percent and 5.9 percent, and exchange operator Saudi Tadawul Group up 5.2 percent.
For many institutions, though, the practical change may be incremental.
JP Morgan said it expected the impact of the new rules to be limited because “nearly all” institutional investors were already allowed to invest in the market.
The bank argued that “the key regulatory change that investors are expecting is the change to the foreign ownership limits, which should have some positive impact on the market,” and said it does not expect that shift before the second half of the year or later.
Investors are watching whether authorities eventually ease the current 49 percent cap on foreign ownership of listed firms.
Reuters said Saudi stocks jumped in September after a report that the CMA might relax this ceiling, and analyst Milad Azar told Reuters that market participants remain focused on if and when that cap will move.
The equity-market changes sit within a wider effort to draw more international capital and reduce reliance on oil.
Reuters reported that Saudi Arabia has been courting foreign investors through exchange-traded funds with partners in Japan and Hong Kong, and by allowing foreigners to buy listed companies that own real estate in Mecca and Medina, while keeping restrictions on direct land ownership.
Bloomberg also highlighted Khuzam, a more than 100bn riyal housing development north of Riyadh, as a flagship project aimed at tackling housing affordability and reshaping real estate while attracting foreign investors and buyers.
