RIYADH — The Saudi Capital Market Authority (CMA) announced on Sunday that the value of foreign investors’ ownership in the capital market soared 300 percent during the last five years from 2018 until the end of 2022 reaching SR347.01 billion.
The authority said in a statement that this is equivalent to 14.2 percent of the total value of free float of shares in the main market, compared to a total ownership of approximately SR86.86 billion in 2018, which represents 3.77 percent of the total value of free float in the main market for that year.
This substantial growth in foreign investment serves as a clear indicator of the financial market’s robust expansion and the burgeoning international confidence in the Saudi financial market. Abdullah Binghannam, deputy president of CMA for listed companies and investment products, said that the authority aims to make the Saudi financial market a leader regionally and internationally. He identified the diversity of the investor base as one of the most important aspects of financial market leadership. “The CMA has made a number of major efforts during previous years to raise the attractiveness of the Saudi financial market to foreign investors and encourage their entry and participation in trading liquidity, offerings, and general assemblies of firms,” he said.
The main financial market witnessed a rise in foreign investments to reach unprecedented historic levels, as net foreign investment exceeded SR180 billion from 2018 until 2022. “Since 2015, when the Saudi financial market was opened to foreign investors directly, the Saudi market has moved from a local market to a market where the foreign investor contributes at a rate exceeding 17 percent of daily trading, after it had not exceeded four percent, with an ownership value of up to SR347.01 billion,” he pointed out.
The contribution of foreign investors to company offerings has doubled, in addition to the increase in the ownership of foreign investors in the Saudi debt instruments market by more than tenfold since this market was opened to all categories of foreign investors without restrictions by the end of 2020. The rate of increase of foreign investments during the year 2022 is the highest since the accession of market to emerging market indices in 2019, which contributed to the increase in the ownership of qualified foreign investors by 1877 percent by the end of 2022, reaching SR271.23 billion, compared to SR13.7 billion in 2018, and SR134.48 billion in 2019, while the percentage of qualified foreign investors owned 78 percent of the total foreign investments in the Saudi market by the end of last year.
According to Binghannam, the expected positive effects of increasing the share of foreign investors in the financial market and increasing their cash flows go beyond that, as it enhances and supports the local economy. “This is through attracting new foreign capital to finance listed companies for growth or recycling capital, in addition to transferring knowledge and expertise to local companies by enhancing the role of foreign investors in it,” he added.
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