In an announcement on Sunday, the Saudi Capital Market Authority said it would allow listing by foreign companies that already have their shares listed on other regulated exchanges, providing the rules in the other jurisdictions in which they are listed are at least equal to those of Saudia Arabia’s.
Saudi Arabia is home to the Gulf’s largest stock market, the Tadawul.
At present all foreigners are prohibited from directly owning the shares of companies listed on the Saudi bourse, with the exception, since 2007, of those from neighbouring Gulf countries.
As reported, India recently said it would allow foreign investors to be allowed to invest directly in Indian stocks "in order to widen the class of investors, attract more foreign funds and reduce market volatility". The announcement followed a year of poor performance by India’s benchmark Sensex index, which lost a quarter of its value in 2011 and contribute to a similar loss by the MSCI Asia (ex Japan) index.
Lure of MSCI
Earlier this month, an HSBC note to investors observed that Saudi Arabia’s stock market could stand to gain MSCI frontier market status if it were to open up its market to foreign investment.
