|Saudi Arabian Stock Exchange Opens to Foreign Investors|
Saudi Arabia has opened its $570bn Tadawul stock exchange to direct foreign investments for the first time, which is widely seen as a crucial stepping stone to the kingdom’s entry into the MSCI Emerging Markets index.
The biggest economy in the Gulf Cooperation Council and the 19th largest economy in the world, Saudi Arabia had a nominal GDP of $753bn in 2014. It is also the most populous nation in the GCC with 30.8m people, more than half of which are under the age of 30.
Under the new rules, qualified financial institutions must have a minimum of five years of related experience and have at least $5bn (SAR 18.75bn) of assets under management. Saudi regulator, the Capital Markets Authority, also has the right to reduce this threshold to $3bn (SAR 11.25bn).
Tadawul is the largest stock market in MENA, and the seventh largest in the global emerging market (GEM) universe, with an average daily value traded of around $2.5bn.
However, Tadawul has not been included in the MSCI Emerging Markets Index because of the restrictions on foreign ownership.
According to market estimates, if included, Saudi Arabia could hold a weight of as much as 4.4% in the MSCI Emerging Market index, which could translate into $5bn of inflows into the Tadawul.
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Published on our website on Jun.16, 2015