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By Jonny Paul | Published Jul 31, 2014

Saudi Arabia to open market to international investors

Saudi Arabia is set to open its $530bn (£312.2m) stockmarket to international investors for the first time next year, it has been announced.

The move will allow the Middle East’s biggest economy to attract more international investment, and reduce its dependence on oil revenue, to the $745bn (£438bn) economy.

Until now, Saudi equities were accessible only indirectly for foreign investors and limited to investors from the kingdom or neighbouring Gulf states.

The benchmark Saudi Tadawul stocks index is already up more than 15 per cent this year.

It currently lists 161 publicly traded companies in sectors such as petrochemical industries, cement, energy and utilities, agriculture, insurance, building. The total value of shares traded has reached SR1,369.67bn (£214bn).

Ghadir Abu Leil Cooper, head of Europe, Middle East and Africa and the frontiers equity team at Baring Asset Management, said the move will allow Saudi Arabian companies better access to capital.

She said: “It’s part of the government’s programme to diversify the economy. In the future, Saudi Arabia, as with many other Middle Eastern countries with youthful populations will face challenges.”

ADVISER VIEW

Gordon Bowden, director of Buckinghamshire-based Quainton Hills Financial Planning, said: “Most clients would be reluctant to have exposure towards this because of a new market and issues about corporate governance and transparency so at best their exposure would be small in a managed emerging market fund.”

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