Report (Link)
RIYADH, Saudi Arabia, Nov. 20, 2023 (GLOBE NEWSWIRE) -- The value of foreign investments in the Saudi capital market has increased by 300% over the past five years, specifically from 2018 to the end of 2022, reaching SAR 347.01 billion by the end of the period. This constitutes 14.2% of the total value of the free float in the main market, compared to SAR 86.86 billion in 2018, which represents 3.77% of the total value of free float shares in the main market for that year.
In this regard, the Capital Market Authority's (“CMA's") Deputy of Listed Companies and Investment Products, Abdullah Mohammed Binghannam, reported that the CMA aims to position the Saudi capital market among the leading markets regionally and internationally. Diversifying the investor base is critical to reaching such a ranking. The CMA has made major efforts in recent years to increase the attractiveness of the Saudi capital market to foreign investors and to encourage their entry and participation in the trading and offerings, as well as in the general assemblies of firms. Since allowing foreign investors to directly invest in the capital market in 2015, the Saudi Capital Market has evolved from a local market to one where the foreign investor participates in daily trading at rates exceeding 17%, compared to less than 4% before. The foreign ownership value now exceeds SAR 347 billion.
Foreign investment in the main capital market has increased significantly, reaching unprecedented historic levels. From 2018 to 2022, net foreign investment in the main market exceeded SAR 180 billion. The contribution of foreign investors to company offerings has increased, and foreign investor ownership in the Saudi debt instruments market has increased more than tenfold since the debt instruments market was opened to all categories of foreign investors without restrictions by the end of 2020. Since the Saudi capital market joined the major emerging market indexes in 2019, the rate of increase in foreign investments throughout 2022 has been the highest. This development has contributed to QFI ownership increasing to 1877%, reaching SAR 271.23 billion by the end of 2022, up from SAR 13.7 and SAR 134.48 billion in 2018 and 2019, respectively. By the end of the preceding year, QFIs accounted for 78% of total foreign investment.
According to the CMA's Deputy of Listed Companies and Investment Products, the anticipated positive effects of raising foreign investors' share of the capital market and improving their cash flows go beyond that. They stimulate the local economy by attracting new foreign capital to finance the growth of listed firms, as well as offering knowledge and expertise to local companies by strengthening the foreign investor's position in them.