Saudi Arabia stocks rally on hopes of foreign investment inflows
Saudi Arabia’s Tadawul All Share index rises on bets the 49% foreign ownership limit could be lifted by year-end.
Saudi Arabia’s Capital Market Authority is planning to ease the rules that limit foreign ownership in listed companies to 49%, according to board member Abdulaziz Abdulmohsen Bin Hassan. The possibility of broader access sparked strong buying activity on September 24 in Riyadh, Bloomberg reports, as investors anticipate increased inflows - both passive and active - if the ownership cap is lifted.
The Tadawul index posted its largest one-day gain in years, up around 5%. Major lenders Al Rajhi Bank and Saudi National Bank hit roughly the 10% trading limit, while Saudi Aramco also moved higher.
Saudi Arabia has gradually opened its market since allowing qualified foreign investors in 2015 and joining major global benchmarks. Authorities have also consulted on broader market-access changes this year. Foreign non-strategic ownership in Saudi equities remains a single-digit share of market value, leaving room for higher participation if limits are relaxed.
This policy shift fits with Saudi Vision 2030, which aims to diversify the economy and rely less on oil. In 2025, growth is being driven mainly by non-oil sectors, with the IMF expecting the economy to expand 3.6% thanks to rising private activity and government spending on megaprojects. The financial sector is also expanding quickly, with assets under management reaching about $295 billion by March 2025. Allowing more foreign ownership could unlock even greater inflows, with analysts at JPMorgan and EFG Hermes estimating up to $10 billion in new investments, particularly benefiting large banks.
The Saudi stock market has risen to the seventh-largest globally by market capitalization, up from around 25th place in 2016, according to Arab News. Its growth has been supported by major listings such as Saudi Aramco, the inclusion of Saudi equities in indexes like MSCI and FTSE Russell, and regulatory reforms. Plans to ease foreign ownership limits mark another step toward making the market more accessible to international investors.
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