Saudi Arabia has eliminated restrictions barring most foreign investors from its stock market, marking one of the boldest financial liberalization moves in the kingdom’s history.
Effective February 1, the Capital Market Authority allows any international investor, including individual traders, to buy shares directly on the Saudi Exchange, or Tadāwul. The change marks the end of the Qualified Foreign Investor (QFI) framework that limited participation to large institutions with at least $500 million in assets under management, forcing nonqualifying players to rely on swap agreements for indirect exposure.
By scrapping QFI, Riyadh aims to transform a market dominated by domestic retail traders into a sophisticated global financial hub. At the same time, the change addresses a glaring imbalance. Overseas ownership of Saudi equities stood at just over 4.7% at year-end, far below comparable emerging markets.
Market performance has lagged, too. Despite a broader global rally, Saudi equities fell nearly 13% in dollar terms in 2025, underperforming the emerging markets index by more than 40 percentage points.
This underperformance, combined with low foreign ownership, leaves ample room for institutional inflows as access improves, analysts argue. With nondomestic investment totaling $111 billion in late December according to Saudi Exchange, some estimates suggest the more liberal rules could attract between $10 billion and $15 billion in new capital in the near term.
The change comes as Saudi Arabia advances Vision 2030, Crown Prince Mohammed bin Salman’s blueprint for reducing dependence on hydrocarbons while developing tourism, technology, and renewable energy sectors.
Established companies with strong governance, clear dividend policies, and reporting standards that global investors can benchmark across borders are expected to benefit first, with smaller and less visible firms likely to attract capital only as confidence deepens.
Several guardrails remain in place, including an aggregate foreign ownership cap of 49% for listed companies and a 10% ceiling for individual nonresident investors. The authorities have signaled that further liberalization, notably majority foreign ownership, could follow. Coming after a decade of incremental reform, success will now hinge on execution.
