Saudi Arabian stocks jump as regulators scrap restrictions on foreign investment

Saudi Arabian equities rallied on Wednesday after regulators announced reforms that will allow all foreign investors direct access to the kingdom’s stock market.

The Tadawul All Share Index climbed as much as 2.5% on Wednesday, its biggest intraday gain since September, after the Saudi Capital Market Authority said it would remove the restrictions that limited who could invest in local equities.

According to a Bloomberg report, the stock market legislative changes revealed late Tuesday deleted a requirement for foreign investors to meet specific eligibility criteria before investing in Saudi-listed stocks.

The new rules now enable non-resident investors to invest directly in the main market starting February 1.

Saudi stock market up 2.5% after foreign investment launch change

Opening the market to global investors, the Capital Market Authority said, dismantles the “Qualified Foreign Investor regime,” and that foreign participation has grown significantly in recent years.

Reuters reported that foreign investor ownership in the Saudi capital market exceeded 590 billion riyals, or about $157.3 billion, by the end of the third quarter. The numbers are much higher than 498 billion riyals counted the previous year. International investments in the Main Market alone reached approximately 519 billion riyals during the same period.

Per data from Google Finance during Wednesday’s morning trading session, banking, energy stocks drove much of Wednesday’s gains. Al Rajhi Bank, one of the kingdom’s largest lenders, trended upwards by 2.1%, while State oil giant Saudi Aramco added 1.1%. Shares of Saudi exchange operator Tadawul Group surged as much as 7%, its sharpest move upwards since late September. 

The rally also came on the heels of an anticipation from the market that regulators could ease up on rules regarding ownership limits. Market participants are now waiting for a possible decision to raise the current 49% ceiling on foreign ownership in listed companies.

According to an analysis by Asharq Business, raising the ownership ceiling could draw in more capital into the country’s economy. JP Morgan has also predicted that lifting the cap to 100% could attract an extra $10.6 billion into Saudi equities.

While Saudi stocks surged, equity markets elsewhere in the Arabian Gulf had more muted moves. Dubai’s benchmark stock index edged up by a meager 0.1%, supported by a 2.9% gain in Air Arabia and a 0.5% uptick in toll road operator Salik.

In Abu Dhabi, the benchmark index was largely unchanged due to losses in technology, utilities and consumer staples that offset gains from other industries. Alpha Data fell 1.2% and Presight AI dropped 0.9%, while Alpha Dhabi Holding gained 0.6% and Dana Gas rose 3.4%.

Saudi energy exports and growth numbers heat economic optimism 

Saudi Arabia’s economic state has provided some support for equities, with its oil exports climbing to 70,106 million riyals in October, up from 69,333 million riyals last September. Over the long term, oil exports have averaged more than 112,000 million riyals annually since 2006, peaking at nearly 339,000 million riyals in March 2012 before hitting a record low in May 2020.

Standard Chartered Global Research expects Saudi Arabia’s gross domestic product to expand by 4.5% in 2026, outpacing the projected global growth average of 3.4%. The forecast is in tandem with the International Monetary Fund’s October report, which projects Saudi GDP growth of about 4% in both 2025 and 2026. 

“While the 2026 growth outlook for Saudi Arabia is strong, it comes with elevated downside risks to oil prices, a sector set to make a comeback in the next year,” Mazen Bunyan, CEO of Standard Chartered Saudi Arabia, said.

The leading country by oil reserves is Venezuela, but the South American country exports relatively little crude after years of underinvestment and economic strain.

US President Donald Trump said that following the capture of Venezuelan leader Nicolás Maduro, America will “have very large oil companies, the biggest anywhere in the world, to spend billions of dollars, fix the badly broken infrastructure, and start making money for the country.”

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