• Saudi Arabia plans to lift the 49% foreign ownership cap, enabling investors to hold majority stakes in listed companies.
• The decision, expected before year-end, could increase Saudi equities’ MSCI weighting and attract large capital inflows.
• Reform supports Vision 2030 by diversifying the economy, enhancing market liquidity, and strengthening Saudi Arabia’s role as an investment hub.
  

Saudi

Saudi Arabia is preparing to introduce a landmark reform to its equity market by allowing foreign investors to hold majority stakes in listed companies.

The Capital Market Authority (CMA) currently restricts foreign ownership to 49%. In an interview with Bloomberg, Abdulaziz Abdulmohsen bin Hassan, a CMA board member, disclosed that the decision is expected to come into force before the end of 2025. This is pending final government approval.

Allowing foreign ownership above 50% would represent a significant shift in Saudi market policy. It would also position the Kingdom to gain greater weight in MSCI indices, a key driver of global investment flows. That in turn would attract additional investment to the market from passive and active fund managers

Market

The Saudi market is currently valued at around USD 2.3 trillion, accounting for 3.3% of the MSCI Emerging Markets Index. Analysts believe that easing ownership restrictions could boat more capital into the market. Moreover it could immediately boost passive investment while encouraging active investors to consider whether they should increase exposure to Saudi companies.

This reform arrives at a critical moment. The  main Saudi index has declined 9.6% since the beginning of 2025, underperforming regional peers and global emerging markets. This is due to geopolitical uncertainty, stable oil prices, and slower government spending.

Despite this performance, foreign investors have continued to increase their holdings, drawn by structural reforms and attractive valuations. Companies such as Tawuniya Insurance, technology firm Rasan, and telecom operator Etihad Etisalat already record foreign ownership levels exceeding 20%.

By opening the market further, Saudi Arabia aims to reinforce investor confidence, increase liquidity, and advance Vision 2030’s goal of building a more diversified, globally integrated economy. If implemented, the reform could significantly enhance the Kingdom’s position as a destination for international capital.