RIYADH — Foreign investors can own no more than 10 percent of Saudi Arabia's stock market by value, the regulator said on Monday as it announced rules opening the $575 billion bourse to direct foreign investment next month. Qualified foreign investors' (QFI) holdings won't exceed 10 percent of the market's value, according to a Capital Market Authority (CMA) statement. The regulator set a 5 percent limit for QFIs in a single stock, and a 20 percent ceiling for QFIs. The Riyadh-based Capital Market Authority restricted foreign ownership of a single stock to 49 percent, and will allow institutional investors with a minimum of 18.75 billion riyals ($5 billion) under management to invest directly in the stock market, according to the regulations published on its website on Monday. The CMA reserves the right to lower that limit to 11.25 billion riyals. The Saudi market is by far the biggest in the Arab world and one of the last major bourses globally to open up, so the reform is attracting huge foreign interest. Fund managers estimate the market could draw $50 billion or more of new foreign money in coming years if it is included in global equity indexes. Saudi income tax laws will apply to foreign investors and a 5 percent tax will be levied on the dividends paid to them by listed companies. Direct purchases of Saudi stocks by foreigners can start on June 15, the CMA has said. At present, they are limited to indirect investment through swaps and exchange-traded funds, which can be inconvenient and more expensive. They are estimated to own no more than about 3 percent of the market. The Kingdom's Tadawul All Share Index has risen 17 percent this year, the best performer among seven major gauges in the GCC. Saudi Arabia may be added to MSCI Inc.'s emerging markets index by 2017 at the earliest, accounting for about 4 percent of the index Sebastien Lieblich, executive director at MSCI Index Research, said in July. The regulator published the draft rules in August. — Agencies
