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Foreign investment in Saudi Arabia’s stocks surged to SR 404.26 billion, up from SR 366.5 billion the previous year – an increase of 16 percent. Foreign investors now own shares in 211 out of 215 companies listed on the Tadawul All Share Index (TASI) main stock index.
The number doesn’t include non-listed public entities such as Knowledge City, Jabal Omar, Taiba, Makkah Construction, or Bahri Company – where foreign investors only own a paltry percentage of just 0.02 since its establishment.
The total market value of Saudi-listed companies is 3.36% owned by foreigners. The following companies have the largest stakes held by foreign investors:
- Petro Rabigh (37.5%)
- Al-Sharq Pipes (35%)
- SABB (31%)
- Arab National Bank (40%)
- Allianz SF (51%)
- Walaa Insurance (7.32%)
- BUPA Insurance (43.25%)
- Chubb Arabia (30%).
Wafa Insurance Company, which was suspended from trading, was 10% owned by foreign strategic investors.
The biggest foreign investment in Saudi Arabia is with the five most popular companies: Al-Rajhi Bank, Saudi National Bank (SNB), SABB, Saudi Aramco and SABIC. A total of SR188.76 billion has been invested among these five companies.
The largest investment was with Al-Rajhi Bank, which received investments from foreigners at a value of SR54.47 billion – accounting for 13.19% of all shares owned; followed by 12.81% for SNB; 40.43% for SABB; 29.96 billion for Saudi Aramco and 28.39 billion for SABIC.
Saudi-Listed Companies Are Increasing in Value. Here’s Why.
Saudi-listed companies have been on the rise, and their value has increased by $100 billion since last year alone, reaching a total of SR404 billion ($107bn). This growth has led to a number of foreign investors choosing to buy up Saudi companies.
So why are Saudi-owned businesses in such high demand right now? Keep reading to learn more!
Improved Economic Conditions
The Saudi economy has been steadily improving since the last recession, and the increasing value of Saudi-listed companies is a sign of this improvement. The total value of these companies increased by 9% to SR404bn, and this is expected to grow even more as the Saudi economy continues to expand.
Foreign ownership works because when one company owns another company, it gets some kind of interest or share of profits from that company. With so many foreign investors wanting to buy up stocks in Saudi companies, they will have a lot more money invested and will be able to reap the benefits of any future growth.
Improved Corporate Governance
The Saudi government has been working to improve its corporate governance and transparency, which has resulted in an increase in foreign ownership of Saudi-listed companies. With the goal of making the country more attractive for international investment, the Saudi Ministry of Commerce and Investment is taking steps to make it easier for foreigners to invest and trade on the Saudi stock market.
Improved Investor Confidence
An increase in foreign ownership of Saudi-listed companies has led to a spike in value and investor confidence. The Saudi government released a law last year that would allow foreigners to own up to 100% of any type of business operating within the country, with certain exceptions. This has led to an influx of international investors, who can now take full ownership without the need for a Saudi sponsor or partner.
Increased Access to Capital
The Saudi Government has been successful in attracting large amounts of foreign capital to the country, and as a result, the value of Saudi-listed companies has increased by SR404 billion. This is because the government has provided these companies with better access to capital, enabling them to grow and thrive.
This trend will only increase as time goes on, making it an excellent time for companies looking for expansion opportunities abroad. Foreign investors have become more confident in the economic outlook of Saudi Arabia due to this trend, and this has led to more investment flowing into their markets.
With the potential for high returns on investments that were previously unattainable due to regulations and restrictions, this is something that any company should take advantage of now while they still can.
Improved Regulatory Environment
The Saudi government has been seeking to improve the regulatory environment for firms listed on the Tadawul, the country’s stock market, focusing on small and medium enterprises. Tadawul has seen an increase in foreign ownership of shares as a result of these reforms, which have helped boost companies’ value and increase liquidity.
Conclusion
The increase results from a more open and stable market, with foreign investors now able to invest in Saudi companies through various channels, including public offerings on the Tadawul exchange.
This means that there are more opportunities for foreigners to invest locally and it has become easier for local investors to diversify their portfolios by investing abroad. Foreigners who want to buy into the Saudi economy can now do so at will, while locals have access to international markets.
