Saudi Arabia to lift foreign ownership cap above 49% on listed firms by year-end

Saudi Arabia is about to let foreigners own more than half of any listed company on its main exchange, a move that breaks a rule that’s been in place for decades. 

The Capital Market Authority is now finalizing changes that would lift the current 49% cap on foreign ownership.

The man confirming it is Abdulaziz Abdulmohsen Bin Hassan, one of five board members who oversee the regulator. He said, “I think we’re almost there. It could come into effect before the end of the year.”

Abdulaziz made it clear that the change still needs approval from other government bodies. But from the CMA’s side, the green light is ready. He didn’t give a specific number for how much foreign investors will be allowed to own.

Still, once the limit goes above 50%, MSCI will have to rework how it ranks Saudi stocks in its indexes. Right now, foreign ownership caps lower a stock’s weight. That’s about to change.

MSCI indexes to react if foreign limits go

Right now, Saudi stocks account for about 3.3% of the MSCI Emerging Markets Index, but that number would increase overnight if the cap is lifted. Fadi Arbid, who co-founded Amwal Capital Partners and serves as its chief investment officer, said, “A decision to relax means the weight in MSCI will all of a sudden go up and more capital will flock to the market.”

This rule change comes at a time when Saudi stocks are having a rough year. The main index on Tadawul is down 9.6%, which makes it the worst performer in the entire Gulf.

Meanwhile, the broader MSCI emerging-markets benchmark is up 25% in dollar terms. That performance gap is not something Riyadh wants to carry into 2026, especially while trying to hit major economic goals.

Foreigners are still buying in, though. In August, they made up 35% of all stock purchases on the exchange. But while the foreign share is growing, total daily turnover has dropped to its lowest since 2023. That means foreign money is grabbing a larger share of a shrinking market.

Saudi Arabia is under pressure to pull in more capital from abroad. The government is deep into its Vision 2030 economic plan, which requires huge spending. But oil revenue is falling behind.

Right now, Brent crude is trading around $66 per barrel, while Saudi’s budget breakeven is $94. Add in domestic spending by the sovereign wealth fund, and that number jumps to $111, according to Bloomberg Economics.

Foreign investors target top Saudi firms despite downturn

Despite all that, foreign investors aren’t running. They’ve actually been buying into a few specific names. Tawuniya, a major insurance firm, Rasan, a tech company, and Etihad Etisalat, a telecom operator, all have foreign ownership levels above 20% but still under 25%.

Abdulaziz’s push to remove the cap is seen as a short-term boost for passive investors, but also a long-term signal for active funds. Fadi said the change could push many of them to rethink their positions and pour more into the market.

The oil slump is still dragging on Saudi stocks, but not every name is bleeding.

According to Kamco’s Ansari, if you remove Aramco and Sabic from the mix, the market is actually showing about 7% profit growth. Some individual stocks are even doing well. Saudi National Bank is up 11% this year. Saudi Telecom Co. has gained 13%.

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