Foreign Investors to have full access to parallel stock market in Saudi Arabia

Saudi Arabia plans to make its capital market more accessible to foreign investors by giving them full access to NOMU, a parallel market recently launched for small and medium-sized enterprises, Mohammed El Kuwaiz, chairman of the Capital Market Authority (CMA) said on Thursday. 

Non-resident foreign investors will be able to invest directly in the parallel market starting from January 1 next year, he said during an investment conference taking place this week in Riyadh. 

Saudi Arabia’s reforms to develop and open up its capital markets are part of Vision 2030, an economic reform plan aimed at boosting growth in the private sector and at diversifying the country’s economy beyond oil. 

Qualified foreign institutions were allowed to start investing directly in Saudi Arabia’s stocks market in 2015, and qualification requirements were eased in 2016. 

Saudi Arabia has now over 100 qualified foreign institutional investors, of which more than 20 percent registered in the past month, Mohammed El Kuwaiz said on Thursday. 

Foreign investors in NOMU will no longer have to meet requirements to qualify as foreign institutional investors, but will have to continue to obey limits on foreign ownership of stocks, the chairman said. 

As part of its efforts to open up the Saudi capital market, the CMA is reviewing issuing and listing rules to make the listing of stocks and debt instruments easier, he said. 

As to new listings, around five to six initial public offerings are currently being reviewed by the authority, El Kuwaiz said. 

When asked about the IPO of oil giant Saudi Aramco IPO-ARMO.SE, El Kuwaiz said that foreign investors could participate in IPOs within Saudi Arabia. Saudi authorities have said Saudi Aramco would be listed on both the Saudi stock exchange, called Tadawul, and on one or more international exchanges. 

During the same investment conference in Riyadh this week, the chief executive officer of Tadawul said the Saudi stock exchange could absorb the entirety of Saudi Aramco’s IPO.