Foreign Investors’ Stakes Rise 150%, in the Saudi Financial Market, at the End of Q2, 2021, CMA Says

Riyadh-Maaal: The Capital Market Authority (CMA) highlighted the most significant developments and events the Saudi financial market experienced.

In addition to measures as well as legislations issued by the CMA, in order to provide as much as possible incentives to woo foreign investor to enter the Saudi market, under the assignments devolved to it, in accordance with the Capital Market law, statutes and regulations.

The CMA have exerted great endeavors and taken various measures to raise the appeal of the Saudi financial market and bolster the foreign investor entry, directly or indirectly, beginning with allowing foreign investors as well as expatriates residing in the Kingdom to directly invest, in the Saudi stock exchange, in 2006 and not to limit foreign investment to the funds only.

Again, in 2008, non-resident foreign investors have been allowed too, to deal in the securities through the swap agreements, with any of those licensed mediation firms.

Furthermore, in 2015, the CMA has made at avail of the non-resident foreign investor to, directly, invest as well as the qualified foreign financial institutions, in the listed securities, following launching the respective regulatory rules.

Coincidently, the CMA began to implement new amended plans to raise the appeal of the Saudi financial market to the foreign investor and to open new prospects for the financial market, via various initiatives.

Remarkably, amending the period given to the companies, according to The IFRS for SMEs Standard and implementing International Accounting Standards Board (IASB) recognized norms, and to settle listed securities deals following 2 working days, in the Saudi stock exchange.

Moreover, in 2016, the CMA amended the regulations related to foreign financial institutions investment in the listed securities, aiming at expanding the investor base, to include government and quasi-government bodies, and to mitigate the minimum valuation required for applicant institutions to be entitled, to become at SR3.75 billion and plus, instead of SR18.75 billion.

The move have taken place in furtherance of updating regulatory rules governing foreign financial institutions’ investment, falls in line with the objectives of revamping the financial market and to expand the basis of institutional investment.

CMA also carried out several main reforms to allow non-resident foreign investors to directly invest in the Saudi parallel stock exchange or (NOMU), in the year to come, i.e. 2017.

At the advent of 2018, the CMA issued a further updating of the regulatory rules for governing foreign entitled financial institution to invest in the listed securities, including allowing any affiliate of a foreign financial institution or the manager of a foreign portfolio or an investment fund steered by them, without lodging another application.

Such an update would facilitate the conditions for qualification and accelerating its procedures through cancelling the requirement to report to and register CMA for an entitled foreign investor, in addition to mitigating some commitment’s requirements as well as the minimum payment criterion.

In the context, the CMA has joined FTSI, Standard &Poor’s and MSCI indices for the emerging markets, a development that greatly helped in raising the foreign investors’ capital flow and, subsequently, increased their ownership stakes, in the Saudi capital market.