The Saudi Capital Market Authority announced the opening of the market to all categories of foreign investors, enabling them to invest directly starting February 1, 2026. What does this decision mean and what are the anticipated gains?

What does opening the Saudi Market to foreigners mean?

Previously, foreign investment in the Saudi financial market was subject to strict regulations. Only Qualified Foreign Investors (QFIs) -typically large financial institutions - could participate, and only with a special permit. Eligibility required meeting stringent criteria, such as being a recognized financial entity (bank, insurance company, or investment fund) with substantial assets to demonstrate experience and reliability. Approval was granted only after a thorough evaluation by an authorized body, in accordance with the rules of the Saudi Capital Market Authority.

The Saudi Capital Market Authority has ultimately decided to eliminate these restrictions, allowing all foreign investors to participate directly in the market - without requiring them to be a financial institution, meet minimum asset thresholds, or reside in the country.

The decision comes after the Authority’s Board approved a regulatory framework enabling non-resident foreign investors to invest directly in the main market, opening the door for a wide range of international investors to participate without intermediaries.

The approved amendments are designed to broaden and diversify the pool of investors in the main market, encouraging greater investment activity and boosting overall market liquidity.

By the end of the third quarter of 2025, international investors held over 590 billion riyals ($157.3 billion) in the Saudi financial market, with investments in the main market totaling around 519 billion riyals. This represents an increase from the end of 2024, when their holdings stood at 498 billion riyals. The recently approved amendments are expected to further attract international investments.

$70 billion in expected returns over two years

According to Abdullah Al-Qahtani, a technical analyst in financial markets, the decision to open the Saudi market to all foreign investors is expected to trigger significant and immediate capital inflows in multiple phases. The first phase, spanning six to twelve months, will likely see institutional investors and sovereign wealth funds focusing on leading sectors such as banking, energy, petrochemicals, and telecommunications. Based on previous foreign holdings and anticipated demand, estimates suggest that between $20 billion and $35 billion could enter the market during this period, with global funds gradually increasing their purchases to avoid price shocks.

According to the Saudi analyst, the second phase, spanning 12 to 24 months, is expected to see further inflows as market liquidity stabilizes and transparency improves. During this period, foreign investment is likely to expand into smaller sectors such as insurance, healthcare, and listed real estate, potentially adding another $50–70 billion over two years. This influx could significantly raise foreign ownership, particularly in large, high-liquidity companies.

Al-Qahtani adds that directly, the Saudi market will become deeper and more stable compared to any other Arab market, and the market's attractiveness will begin to rise for all global investment funds, enhancing the value of companies and reducing price fluctuations in the medium term.

Other Arab markets

Arab financial markets generally take a gradual and open approach toward foreign investors, with varying restrictions and ownership limits. For example, the Abu Dhabi Securities Exchange and the Dubai Financial Market permit foreigners to invest directly in listed stocks, often with a 49% ownership cap unless the company’s articles of association allow otherwise. Certain strategic companies may also have specific, lower caps.

Meanwhile, the Qatar Stock Exchange has broadened the base of foreign investors by raising ownership limits in certain companies to 49%, while the government maintains restrictions on strategic sovereign sectors. 

At the Kuwait Stock Exchange, foreign investors can hold shares directly without needing to qualify as a “qualified investor,” although they must comply with ownership limits specified by company rules and sector regulations.

The Muscat Securities Market follows a relatively open model, allowing foreign investors to buy most stocks directly, with only limited restrictions in certain sectors.

On the Bahrain Stock Exchange, foreign investors are allowed broad ownership in most listed companies, with only a few exceptions for national security reasons.