Saudi Arabia to Delay Decision on Foreign Ownership Limits to Next Year
Capital Market Authority signals review of majority-foreign stake rules will conclude in 2026 rather than 2025, prompting equity market reaction
Saudi Arabia’s regulatory authorities have stated that they will revisit the limit on foreign ownership of stakes in listed companies next year, rather than immediately lifting the cap, prolonging investor uncertainty and triggering a mid-week drop in equities.
Mohammed El-Kuwaiz, chairman of the Capital Market Authority (CMA), said at the Future Investment Initiative in Riyadh that the board is still examining whether to eliminate the ceiling entirely or raise it in phased stages.
The current framework restricts non-resident foreign investors to owning less than ten per cent of a listed firm’s shares, and caps total foreign ownership (excluding strategic investors) at 49 per cent.
Revisions to these rules had been widely expected before year-end, with prior comments from CMA officials projecting changes “before the end of this year.”
Markets responded swiftly.
On September 24 the Tadawul All Share Index rallied over 5 per cent as reports surfaced that the cap might be abolished.
Since the CMA’s statement signalling a deferral, some investor optimism has cooled, as analysts weigh how the timing and scope of reform will affect global-fund flows into Saudi equities.
Investment banks have estimated that removing the cap could attract between US$9 billion and US$11 billion of new inbound passive investment via index inclusion shifts and fund re-allocation.
The delay therefore raises questions about the pace at which Saudi Arabia’s capital-market liberalisation will advance.
The kingdom’s reform agenda is part of its broader Vision 2030 efforts to develop deep, liquid domestic capital markets and reduce dependency on hydrocarbons.
While opening ownership rules is a critical pillar, regulators emphasise that changes must be supported by updated disclosure, governance and market-integrity frameworks.
Investors will now focus on the next detailed consultation phase, in which the CMA intends to publish draft regulations and transition timelines for comment.
Execution of the reforms—not merely announcement—will determine how quickly Saudi equities can deepen their global investor base.
Mohammed El-Kuwaiz, chairman of the Capital Market Authority (CMA), said at the Future Investment Initiative in Riyadh that the board is still examining whether to eliminate the ceiling entirely or raise it in phased stages.
The current framework restricts non-resident foreign investors to owning less than ten per cent of a listed firm’s shares, and caps total foreign ownership (excluding strategic investors) at 49 per cent.
Revisions to these rules had been widely expected before year-end, with prior comments from CMA officials projecting changes “before the end of this year.”
Markets responded swiftly.
On September 24 the Tadawul All Share Index rallied over 5 per cent as reports surfaced that the cap might be abolished.
Since the CMA’s statement signalling a deferral, some investor optimism has cooled, as analysts weigh how the timing and scope of reform will affect global-fund flows into Saudi equities.
Investment banks have estimated that removing the cap could attract between US$9 billion and US$11 billion of new inbound passive investment via index inclusion shifts and fund re-allocation.
The delay therefore raises questions about the pace at which Saudi Arabia’s capital-market liberalisation will advance.
The kingdom’s reform agenda is part of its broader Vision 2030 efforts to develop deep, liquid domestic capital markets and reduce dependency on hydrocarbons.
While opening ownership rules is a critical pillar, regulators emphasise that changes must be supported by updated disclosure, governance and market-integrity frameworks.
Investors will now focus on the next detailed consultation phase, in which the CMA intends to publish draft regulations and transition timelines for comment.
Execution of the reforms—not merely announcement—will determine how quickly Saudi equities can deepen their global investor base.
