Saudi equities jump ahead of rule change on foreign investors
- 24 de set. de 2025
- 2 min de leitura
Saudi Arabia’s stock index surged on Wednesday following reports the kingdom may raise foreign-ownership limits for listed companies.
Stocks up nearly 5%
Hit two-year low this month
Fund rises worth billions
The proposed increase would likely result in greater weighting for Saudi companies within the MSCI Emerging Market Index and FTSE Emerging Market Index benchmarks.
The possible limits were reported by Bloomberg on Tuesday following an interview with a Capital Market Authority board member.
Riyadh’s main share index rose nearly 5 percent in early trade as blue-chip stocks led gains. Saudi National Bank and Alrajhi Bank, the Saudi companies with the largest weightings in the MSCI index, each climbed just under the 10 percent maximum increase that can take place in a day.
Saudi shares rise
Price changes in early trading on September 24
The market surge provides some respite for Saudi Arabia’s beleaguered stock market, which is down 5.5 percent this year and had slumped to a two-year low in mid-September. In contrast, Dubai’s benchmark is up nearly 14 percent and Kuwait’s premier index has gained more than 20 percent in 2025.
“The Saudi stock market has faced a number of headwinds this year, with the lower oil price and rising concern about liquidity tightness in the banking sector,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
“These underlying issues remain, though there will be a boost to passive inflows from an increase in Saudi’s weight in the MSCI Emerging Market Index.”
The proposed changes, which have not been formally announced, are unlikely to have a significant impact on active investors. Although the current foreign-ownership ceiling is 49 percent, no companies are close to this limit.
Yet potential additional passive fund inflows, should Saudi Arabia’s weighting on emerging market indexes increase, could be worth up to $15 billion a year, according to Sanat Sachar, a portfolio manager at Azimut Middle East in Dubai.
About $1.4 trillion of assets under management are benchmarked against the MSCI index. Saudi Arabia’s weighting on the MSCI index was 3.3 percent as of August, according to asset manager State Street Investment Management, which tracks the benchmark for an exchange-traded fund.
Nishit Lakhotia, head of research at SICO Bank, said in the short term there might be a rush of “panic buying by regional fund managers who were underweight on TASI”, Saudi Arabia’s main stock index.
He suggested gains seen in the market immediately following the news may be higher than when the changes are implemented.
“We do expect some of the active funds which had exited or which had not considered the Saudi market to start looking at it,” said Alinma Capital equity analyst Muhammad Fawad Khan. “So we do expect both passive and active funds to increase.”
AGBI has sought comment from the Saudi Capital Market Authority.
By Edmund Bower, Matt Smith
September 24, 2025, 4:26 PM
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