Saudi may loosen stock foreign ownership limit in 2016

Saudi Arabia’s Capital Market Authority is reportedly fast-tracking its plans to ease restrictions on foreign investment in the kingdom’s stock market.

In May, the regulator said it would allow foreign investors to own larger stakes in listed companies under new regulations expected to be implemented in mid-2017.

Read: Saudi to loosen foreign ownership limits for stocks

However, CMA chairman Mohammed Al-Jadaan told the Wall Street Journal in an interview that the changes could be implemented later this year.

“It might be in this year,” he was quoted as saying, adding that a public consultation on the proposed changes concluded last week and the rules could be published by the end of September.

The changes include the lowering of the assets under management required to qualify as a foreign investor from SAR 18.75bn to SAR 3.75bn ($1bn) and an increase in the stake foreign investors can own in a single company from 5 per cent to 10 per cent.

The rules changes come as the kingdom plans a listing of state-owned oil giant Saudi Aramco on local and international exchanges.

Aramco is estimated to be worth between $2 trillion and $3 trillion meaning the stake could raise up $100bn to $150bn.

“It [Aramco] will call attention. If they are focusing on the Saudi market, they will then look at other assets,” Al-Jadaan was quoted as saying.

“We want to make sure the whole ecosystem is prepared for it,” he said, adding, “We will be thrilled to have Aramco come to the market. It’s something we would proud of, but we also want to make sure that we are ready.”

“It’s going to be a huge amount and it’s unlikely that local demand will cover it, so you’ll be looking for international cover. And you want to make sure that the international demand process is prepared,” he said.