Saudi Arabia considers relaxing ownership limits for foreign investors
Saudi Arabia’s Capital Market Authority (CMA) is considering
relaxing a 49 percent limit for foreign strategic investors in shares of listed
companies due to increased demand, its chairman said on Thursday, according to Reuters.
Foreigners currently own 5.5 percent of Saudi equities but
that could nearly double by the end of 2020, Mohammed El Kuwaiz said in an
interview on the sidelines of a financial conference in Riyadh.
“We found most strategic investors are maybe looking to
build more sizeable stakes,” Kuwaiz said.
The kingdom has introduced a raft of reforms in recent
years, winning endorsements from international index compilers MSCI and FTSE
Russell, as it seeks to position its bourse as an international capital markets
hub.
Local shares were incorporated into the FTSE emerging-market
index in March and will join the MSCI emerging market benchmark later this
year.
An upcoming sale of shares in shopping mall operator Arabian
Centres Company, owned by Fawaz Alhokair Group, will be the first offering in
the kingdom under Rule 144a, which allows the sale of securities primarily to
qualified institutional buyers in the United States.
The Saudi stock market is the Middle East’s largest exchange
and has seen an upsurge in foreign fund flows since the start of the year due
to the inclusion in the emerging markets indexes.
The country’s Tadawul All-Share Index is up more than 18
percent year-to-date, one of the best performances in the region.
At least six Gulf firms have expressed interest in an
additional listing on the Saudi exchange, which is due to release detailed
procedures in the next two weeks, the chief executive of the bourse told
Reuters during the financial forum on Thursday.
“We have at least one to two companies already in a very
good stage of their preparations to submit their files,” Khalid Al Hussan said
at the conference.
The exchange will launch the country’s first index futures
contracts in the second half of the year, Hussan added, allowing investors to
take a view on the direction of the index without having to buy individual
shares.
On Thursday the CMA, the country’s bourse and its Debt
Management Office (DMO) announced a reduction in fees and commissions to
encourage secondary market trading of debt.
The three entities said trading commissions for the Tadawul
and the CMA had been reduced, while fees for new offerings and annual
registration charges for issuers were also reduced.
The DMO also reduced the par value for government-issued
sukuk, or Islamic bonds, from 1 million Saudi riyals ($266,666.67) to one
thousand, signaling further government efforts to facilitate access to the bond
market for retail investors.
($1 = 3.7500 riyals)