Saudi Arabia aims to enable direct investment by GCC residents: ElKuwaiz

Mohammed ElKuwaiz, Chairman of the Capital Market Authority (CMA)

The volume of foreign investment in the Saudi market was slightly higher than SAR 400 billion, Mohammed ElKuwaiz, Chairman of the Capital Market Authority (CMA), said at the Future Investment Initiative (FII) conference.

The Kingdom’s economic performance and its future are the key driving force for foreign investment, he added.

The pace of IPOs also spurs foreign investors, who are more willing to participate in offerings for pricing.

In addition, regulatory amendments are considered one of the most three vital drivers for foreign investment.

ElKuwaiz sees two prominent amendments to expand the scope of foreign investment. The first is to work on reviewing the rules of opening investment accounts, considering dealing with GCC residents as Saudi residents regarding investing in stocks, and thus allowing them to invest directly in the Saudi market.

This will be followed—after a year—with a review of the investor regulations to liberalize them in terms of the targeted categories and ratios, which have become a restricted factor for foreign investors.

The CMA Chairman highlighted that the rates of financing in the Saudi economy were the fastest growing across the world.

Saudi Arabia aims to maximize its market volume and attract foreign investments, which have upgraded from almost nil five or six years ago to SAR 400 billion currently.

The CMA has 50 documents for potential IPOs on the Saudi Exchange (Tadawul). In addition, Tadawul recorded 100 agreements signed with financial advisors for offering purposes.

These agreements affirm that IPOs are on track, reflecting the Saudi economic growth, he stressed.

The offerings facilitate transferring the pricing process to the sector itself, as it becomes a process of building the order book, and the institutional investor carries out the pricing process.

He pointed out that the investment funds category and the asset management sector represent the real evaluation and long-term outlook, justifying the focus on boosting the provision ratio to them. Thus, the performance of fund managers was better than the index during the past period.

The pace of Saudi foreign investment is improving, ElKuwaiz said, estimating about $3 trillion volume of investment in Saudi Arabia from now until Vision 2030.