Saudi Arabia may raise foreign ownership limit in companies
Saudi Arabia is considering further easing restrictions on the share of foreign investors in publicly traded companies. According to Asharq Al-Awsat, this could potentially attract billions of dollars to the country’s stock market. Morgan Stanley estimates that raising the foreign ownership cap from 49% to 75% could generate about $4.3 billion in inflows from funds tracking stock indices. According to the bank, fully abolishing the limit could increase this figure to $7.4 billion.
Expectations of further steps to open the market increased after Mazen Al-Sudairi was appointed chairman of Saudi Arabia’s Capital Market Authority. The publication notes that such measures could enhance the attractiveness and depth of the Saudi market for international capital.
The role of index funds
Financial analyst Abdullah Al-Hamed believes that expanding the cap could affect capital inflows in two ways. First of all, this concerns passively managed funds focused on global indices, including the S&P and FTSE. A higher permitted level of foreign ownership could increase Saudi Arabia’s potential weight in these indices and direct funds in line with its index weighting.
Actively managed funds, he said, will make decisions more slowly, as they assess the overall state of the market and the financial performance of individual companies. Under the most favorable scenario, capital inflows could reach about $7 billion. Among the potential beneficiaries, the analyst named major companies, including Al Rajhi Bank and Saudi National Bank.
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The limit alone is not enough
Financial and economic adviser Hussein Al-Attas stressed that easing the restrictions would be positive for Saudi stocks, but would not become the sole or main factor driving inflows. According to him, the share of foreign investors in most listed companies remains significantly below the current 49% threshold.
Investor decisions are also influenced by company valuations, earnings growth rates, liquidity, corporate governance, market depth, and the ability to enter and exit investments. Al-Attas associates the greatest potential for growth in foreign participation with high-growth companies in technology, healthcare, consumer services, and logistics.
Saudi stock market data for the September 1, 2026 session showed mixed dynamics. The share of foreign investors in Saudi Fisheries increased by 0.57 percentage points to 5.42%, while in Yanbu Cement it rose by 0.50 points to 9.39%. At the same time, this indicator declined, in particular, at Rasan, Al-Babtain, Edarat, Mobily, and Jarir.
