Saudi Arabia's announcement to allow foreign investors to own majority stakes in local listed companies weighed heavily on the Saudi stock market today, with trading jumping significantly and the main market index rising by 5%.

Ownership in listed companies

The Kingdom's move to raise the percentage of foreign ownership in listed companies is seen as an unprecedented move that will benefit the Saudi market and the investment environment in general, as it will lead to huge financial flows to the Kingdom from global funds and major investment institutions.

This article is a review of the Kingdom's approach to foreign ownership in listed companies in the Kingdom of Saudi Arabia. In this report, we review a number of positives that will benefit the Saudi market if the increase in the percentage of majority stakes in local companies listed on the stock exchange is implemented.

Effect of raising the foreign ownership ratio

The Kingdom's move to increase the share of foreigners in listed companies contributes to the automatic attraction of billions of dollars of investment, especially since this approach leads to reducing the relative weight of Saudi stocks in emerging market indices, which leads to an increase in the percentage of foreign ownership of Saudi companies in the index.

The impact of this Saudi approach is to increase the percentage of foreign ownership of Saudi companies in the index.

This Saudi trend has expected repercussions on major stock prices, as the banking sector and other vital sectors are expected to witness increased demand with the entry of huge foreign funds.

The impact of this trend will not be limited to the banking sector and other vital sectors, as it is expected to witness increased demand with the entry of huge foreign funds. Not only will this move attract huge capital to the Saudi market, but the performance of local companies will improve significantly due to the presence of a foreign investor, increasing the long-term attractiveness of the companies.

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Uniform opinion of experts

According to Mohammed Al-Faraj, Senior Head of Asset Management at Arbah Capital, this move is a message of confidence to foreign investors in the Saudi market, as well as it will contribute to attracting more inflows from foreign funds and capital during the coming period.

A number of experts unanimously agreed on the positivity of this move that the Kingdom is heading towards.