Equity markets: Saudi Arabia’s big step forward

Chris Wright
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Its stock market is the biggest in the region, but impenetrable. That is about to change: the local regulator says foreigners will be allowed to invest from next year. That’s a big deal.

For years Saudi Arabia has been the ultimate stock market loner, combining size and depth with stubborn inaccessibility. A market as big as Russia’s, the Saudi equity market has been closed to all foreign investors bar those prepared to tolerate an inefficient and sometimes murky system of swaps and P-notes; those who want direct exposure to the hydrocarbon-rich Gulf have instead had to go for the more open, but much less mature markets of Qatar and the UAE.

Apparently, that’s all about to change. In July, Saudi Arabia’s Capital Markets Authority made a momentous announcement: that foreigners would be allowed to invest in listed shares, starting in the first half of 2015.

This is a very big step, on three metrics: the evolution of Saudi’s capital markets and, consequently, economy; the boost it will give to foreign-investor interest in Saudi and the broader region; and an...