Asked how the opening of his markets to foreign capital will affect the exchange, Al-Ghamdi points out that Saudi is not totally isolated from the rest of the world. “It is worth noting that the Saudi capital markets, to a large degree, are already open to foreign investment flows,” he says. “Indeed, the ETFs [exchange-traded funds] and mutual funds markets have no legal or regulatory restrictions inhibiting direct foreign investor participation.”
Through these methods, foreigners – including those in the GCC, foreign strategic shareholders and resident foreign investors – already held 8.2% of Saudi Arabia’s market cap by June 2014, Al-Ghamdi says.
The new CMA rules, he says, “will simply serve to widen the access channel” so that foreign institutional capital joins those investors who have been using the Saudi Equity Swap Framework, the indirect model that has been available since 2008.
If this sounds like he is making light of the move his exchange is about to take, it is perhaps a pre-amble to demonstrate that the Saudis are not taking a blind step into the unknown, more an extension of something that started some years ago.
