Saudi Arabia will provide foreign investors with access to its stock exchange Tadawul which capitalization totals $572 billion. Now, international companies can operate on the stock exchange. For instance, they can buy shares of the companies which securities are traded on it, but there are some restrictions.
Only investors who received confirmation of the country’s regulative bodies will be able to trade on the stock. Moreover, there is a limit to an investment size and to buying shares of the Saudi Arabian companies (not more than a half). Direct access will be given to foreign investors holding not less than 18.75 billion riyals or $5 billion on their accounts. However, this limit will be trimmed to 11.25 billion riyals, Saudi Arabia’s Capital Markets Authority informs. Foreign investments will not exceed 10% of the stock’s total capitalization.
Before the decision to open the exchange, foreigners could influence it only through derivatives and investment funds. The decision is linked to the governmental program for economic diversification. In 2015, the country’s GDP growth rate will drop to 2.5% compared with 3.6% in the previous year, experts forecast.
