[2008-08-21]  Saudi allows foreigners to buy shares
Saudi Arabia yesterday said it would allow foreigners to buy shares listed on its stock market through licensed intermediaries, a major step toward opening the largest Arab bourse to foreign capital.The stock market, Tadawul, has been the least open among GCC bourses to foreign investors, up to now giving foreigners access to stocks only through select funds.

As part of plans to diversify the market's investor base, the Capital Markets Authority (CMA) said foreign investors are now entitled to buy shares through certain licensed Saudi investors, who would be the legal owners of the shares.

Under the measure, potential foreign investors would be entitled to returns related to their share purchases and must take on all of the economic exposure, the CMA said.

"The authority approved that licensed individuals sign swap agreements with non-resident foreigners - institutional or individual - for the purpose of transferring the economic benefits of shares in Saudi listed companies to those persons," it said.

The move was part of "continued efforts of the authority to develop the financial market", the CMA added, without saying when the decision would be take effect.

The announcement comes less than a week after the exchange began naming investors with stakes of five per cent or more to boost transparency, a move that has encouraged an eight-day rally.

Abdulhamid Al Amri, a member of the Saudi Economic Association think tank, said the measure would boost the bourse without exposing it to "hot money".

"This measure will definitely have a positive impact on the Saudi market which should last throughout Ramadan," he said. "The measure was designed in a way that would prevent the entry of hot money by tying the legal ownership to local investors."

CMA had yet to publish the measure, which sets rules governing transactions under swap agreements.

Source: Arab News