Foreign investments in the Saudi capital market surge by 300% in last 5 years: CMA

Foreign investments in Saudi Arabia’s capital market surged 300 percent to SR347.01 billion ($92.53 billion) in 2022 from SR86.86 billion in 2018 thanks to the Kingdom’s economic diversification plans.

According to the Capital Markets Authority, the foreign investment attracted in 2022 constituted 14.2 percent of the total free float value in the primary market.

The increase is significant, considering that the foreign funds accrued in 2018 represented 3.77 percent of the entire free float value in Tadawul.

Abdullah Binghannam, deputy president of CMA for listed companies and investment products, stated that this substantial growth clearly indicates the rising international confidence in the Saudi market.

He further noted that CMA aims to strengthen the Saudi capital market both regionally and internationally, emphasizing that diversifying the investor base is critical to achieving that goal.

“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,” said the authority in the statement.

Saudi Arabia’s primary market witnessed a significant rise in foreign investments to reach unprecedented historic levels, exceeding SR180 billion from 2018 until 2022.

“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 percent, compared to less than 4 percent before,” added the statement.

According to CMA, the contribution of foreign investors to company offerings has risen, 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.

Meanwhile, qualified foreign investor ownership in the Saudi capital market increased by 1877 percent, reaching SR271.23 billion in 2022, up from SR13.7 billion and SR134.48 billion in 2018 and 2019, respectively.

In 2022, QFIs accounted for 78 percent of total foreign investment in the Saudi market.

Binghannam added that the CMA implemented various initiatives in the last five years to increase foreign investors’ participation in the Saudi capital market.

Some of the efforts by the CMA include allowing foreign investors to invest in debt instruments directly and approving instructions for International Central Securities Depositories. This step facilitates attracting foreign investments to Sukuk and debt instruments in the domestic market.