The Capital Markets Authority (CMA) has revealed the most important developments and events that the capital market of the Kingdom of Saudi Arabia witnessed and the procedures and laws that CMA implemented to develop the capital market through working on stimulating the entry of foreign investors according to its tasks under the capital market bylaw and regulations related to their implementation.
CMA has exerted several efforts and implemented various procedures to increase the attractiveness of the CMA and enhance the direct and indirect entry of foreign investors, starting from allowing resident foreign investors to invest in the Saudi capital markets directly as of 2006 rather than limiting foreign investors to invest in investment funds. In 2008, non-resident foreign investors were allowed to invest in securities through exchange agreements through a CMA-certified brokerage firm. In 2015, CMA allowed non-resident foreign investors to directly invest through launching rules regulating the investment of qualified foreign financial institutions in listed securities, where the Authority in the same year also allowed an amendment plan with the aim of increasing the attractiveness of the market to foreign investors and opening new scopes for the market through several initiatives, mainly amending the duration of settling listed securities deals to be after two business days (T+2) and applying international accounting rules issued by the International Financial Reporting Standards on companies listed on the Saudi CMA.
CMA, in 2016, amended rules regulating the investment of foreign financial institutions in listed securities through alleviating the qualification requirements with the aim of expanding the investor base to include government bodies and government-affiliated bodies, reducing the minimum volume for the value of assets that are run by the institution requiring the qualification to at least 3.75 billion riyals instead of 18.75 billion riyals. The amendments on rules regulating the investment of foreign financial institutions on listed securities are in harmony with CMA’s efforts aimed at developing the capital market and expanding the base of institutional investment, where the Authority also implemented several basic reforms, such as allowing non-resident foreign investors to directly invest in the Parallel Market (Nomu) as of 2017.
As a result of these efforts, the ownership value of foreign investors in CMA increased by more than 150% by the end of the second quarter of 2021 compared to the end of 2018, where the banking, basic items, energy and communications sectors were among the highest sectors in attracting foreign investment.
CMA stressed that these efforts have a tangible positive impact in increasing foreign monetary flows into CMA, stimulating foreign investors to positively contribute to the capital market, and providing them with an opportunity to invest and save through their ownership of securities listed on CMA, which all played a role in increasing the attractiveness and efficiency of the market to foreign investors.
CMA seeks to contribute to realizing the goals of the Kingdoms' Vision 2030 through developing the financial sector that aim at creating an attractive environment to all categories of local and international investors alike.