RIYADH: Foreigners would soon be allowed to trade on the Arab world’s biggest bourse — the Saudi stock market. The Saudi Tadawul stock market has a capitalisation of around $530 billion.

In a long-awaited mood, the government granted the regulator, the Capital Markets Authority, the power to grant foreigners the right to buy and sell shares “at a time it sees as appropriate,” the official Saudi Press Agency reported.

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The move was approved by the Saudi cabinet. No timetable though was given for implementation of any opening up. The Saudi market regulator is now expected to finalise details and announce the timing of the move.

The benchmark Saudi Tadawul stocks index is up some 14 per cent this year, and opening the market to foreign investors will likely send it sharply higher in the near term, traders here felt.

In 2008, the kingdom began allowing foreign investors indirect access to the market through swaps, but it has hesitated to open the market fully to foreigners, and the topic has been long discussed.

Mooted for years, the move has been delayed amid concerns that foreign ownership of large Saudi companies, which benefit from the public spending generated by the country’s huge oil revenues, would come at the expense of Saudi nationals.

The Tadawul all-share index has risen 46pc over the past two years as optimism returned to the market after the global financial crisis and the Arab spring hit regional markets.

The government, keen to diversify the economy away from hydrocarbons, has been encouraged to open up its stock market as an indicator of its commitment to attracting foreign capital into attempts to broaden economic activity beyond oil and gas and related downstream industries.

Published in Dawn, July 23rd , 2014