The Saudi market index surpassed 10,000 points on Tuesday after the Cabinet approved a measure that will open the local stock market to direct foreign investment next year.
The Tadawul All-Share Index rose 3.2 percent, its biggest rise since April 2012, to a fresh six-year high of 10,062 points in the first hour of trade, bringing the index’s gains so far this year to 17.45 percent.
It later closed at 10,025.14 points, up 275.12 points (2.82 percent).
Economists welcomed the decision to allow foreign investments in Tadawul.
“The focus on foreign institutions should also mark another important step in the gradual institutionalization of the Saudi stock market,” commented Jarmo T. Kotilaine, a regional analyst.
“The move should not only attract more capital to the Saudi market but also contribute further to the ongoing process of developing quality research on Saudi equities,” he told Arab News.
Currently, foreigners are limited to buying Saudi stocks via swaps involving international banks and through a small number of exchange-traded funds.
Acknowledging the benefits of market liberalization, Basil M. Al-Ghalayini, CEO of BMG Financial Group, told Arab News: “We still do not know the details of this new directive, but I believe it will be a gradual process to ensure attracting mainly institutional investors.”
The opening of the Saudi market, capitalized at about $530 billion, is one of the most keenly awaited economic reforms in the Kingdom.
Mohammed Al-Sheikh, chairman of CMA (Capital Market Authority), said he hoped that the opening up of the market for foreign financial firms would start by the middle of 2015.
The International Monetary Fund has raised its economic growth forecast for Saudi Arabia from 4.1 to 4.6 percent.
It said the Kingdom’s private sector growth is expected to remain strong with little change in oil production from 2013.
FULL STORY: Cabinet move sparks Tadawul rally; KSA set for massive funds inflow
