Saudi Arabia Opens Financial Markets to Foreign Investors to Reduce Oil Dependence

"Qualified Foreign Investor" System Abolished from February
Aiming to Reduce Oil Dependence and Attract Investment

President-elect Yoon Sukyeol is meeting with Deputy Ambassador Abdullah Sultan Alsamahi of the Embassy of the United Arab Emirates in Korea, Zakaria Hamed Hilal Alsadi, Ambassador of Oman to Korea, Sami Alsadhan, Ambassador of Saudi Arabia to Korea, Bader Mohamed Alawadi, Ambassador of Kuwait to Korea, and Deputy Ambassador Mishal Saeed Alkuwari of the Embassy of Qatar in Korea at the transition office in Tongui-dong, Jongno-gu, Seoul on the afternoon of the 1st. Photo by Transition Office Press Corps

Saudi Arabia will open its financial markets to all foreign investors starting February 1. This move is seen as an effort to reduce the country's dependence on oil and attract foreign investment.

According to Reuters on the 6th (local time), the Capital Market Authority (CMA) of Saudi Arabia has abolished the "Qualified Foreign Investor" system. Previously, only foreign investors who had received approval from the CMA could invest in Saudi Arabia's financial markets.

The UK Competition and Markets Authority commented on the measure, stating, "Investors from around the world will now be able to invest directly in the capital market, which will promote capital inflows and improve market liquidity."

In line with its economic and social reform plan, "Vision 2030," Saudi Arabia is working to reduce its reliance on oil and gradually dismantle religious taboos. Recently, the country has also launched large-scale investments to establish itself as a leading AI powerhouse, taking advantage of the ongoing AI competition between the United States and China. The full opening of the financial market is interpreted as part of these efforts.

After announcing in September last year that it would ease the 49% cap on foreign ownership in listed companies, Saudi Arabia allowed foreigners to acquire shares in listed companies that own real estate in Mecca or Medina. Following this, the Saudi stock market surged.

JP Morgan analyzed, "The key regulatory change that investors are anticipating is the adjustment of the foreign ownership cap, which is expected to have a positive impact on the market." However, the easing of foreign ownership restrictions is expected to be implemented in the second half of this year.