Final rules will be approved by early May
- Saudi Stock Exchange (Tadawul) to open to foreign investors in June
- Overseas investors can start trading on 15 June
- Investment rules to be published on 4 May
The kingdoms Capital Market Authority (CMA) issued a statement on 16 April setting out a timetable for the opening of the exchange.
The final rules governing foreign investment will be approved and published by 4 May. They will be effective from 1 June and qualified foreign investors will be allowed to invest in listed shares from 15 June.
Allowing foreign investment into the exchange has been debated for several years, but it was not until mid-2014 that the Saudi cabinet gave its approval for the move.
The CMA then initiated a 90-day consultation period, in which investors and interested parties discussed the setting up of rules governing foreign investment.
Draft rules for qualified foreign financial institutions to invest in listed shares were published on 21 August last year.
The opening of the exchange is partly to help increase trading activity on the exchange and help diversify the economy away from hydrocarbons.
It could also help bolster the Saudi bank market, say analysts.
Banks grew at a slower pace in the first quarter of 2015 compared with the same period last year, with lending activity starting to slow as a reaction to the low oil environment.
As Tadawul opens up to foreigners in June, blue chip bank names with strong fundamentals will immediately attract international flow, thereby offering support and a base to the banking sector in general, Akber Naqvi, executive director at Al-Masah Capital, in Dubai, told MEED.
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