Saudi Arabia has relaxed a 49 per cent limit for foreign investors in shares of listed companies.

The move is aimed at attracting billions of dollars of foreign funds as the kingdom opens up the region’s largest bourse to a more diverse investor base.

There will be no minimum or maximum ownership limit, although the owners must hold the shares for two years before they can sell.

Riyadh has introduced a raft of reforms in recent years to make the Saudi Stock Exchange (Tadawul), the region’s biggest stock market, attractive to foreign investors and issuers.

The move aims to help enhance the market’s efficiency and attractiveness, to expand the institutional investments base, the regulator, the Capital Market Authority (CMA), said in a statement on its website.

The Saudi stock market, which opened to foreign investors in 2015, has seen an upsurge in foreign fund flows since the start of the year due to its inclusion in the emerging markets indexes.

Foreign investors have been net buyers of Saudi equities over the past few months, with purchases worth SAR51.2bn ($13.65bn) until 30 May. They currently own 6.6 per cent of Saudi equities, of which 3.15 per cent is owned by strategic foreign investors.

Local shares were incorporated into the FTSE emerging-market index in March and the MSCI emerging market benchmark in May this year.

Saudi Arabia’s Tadawul All-Share Index is up 11 per cent year-to-date.

Strategic foreign investors can take stakes in listed companies by buying shares directly on the market, or through private transactions and via initial public offerings.

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