Saudi TASI Soars on CMA Plans To Ease Foreign Ownership Cap

Saudi Arabia’s main stock exchange rallied sharply on Wednesday following news that the Capital Market Authority (CMA) is considering allowing foreign investors to own majority stakes in listed companies.

The Tadawul All Share Index jumped as much as 5%, reaching a high of 11,417, with 250 stocks advancing.

 The rally was led by the banking sector, with Saudi National Bank and Al Rajhi Bank, the world’s largest Islamic lender, each surging 10%, hitting the maximum daily limit. Banque Saudi Fransi also posted strong gains, rising 9.84%.

The proposed reform could see the CMA lift the current 49% cap on foreign ownership, potentially unlocking significant inflows of both active and passive investment. Analysts say the move could improve valuations and increase the weight of Saudi stocks in MSCI’s benchmark indexes.

“The move is clearly a positive catalyst for an otherwise depressed equity market, in our view, as it unlocks an important potential of inflows of foreign capital, investment bank EFG Hermes said in a report.

“We estimate total passive inflows of $10.5 billion from stocks that would benefit from a 100% foreign ownership limit (FOL) scenario, with the banking sector having the lion’s share, led by Al Rajhi, SNB and Alinma.”

A Bloomberg report on Tuesday said the reform could come into effect before the end of the year.