Saudi Arabia has removed more restrictions on non-resident portfolio investors, with analysts expecting the next stage to be lifting foreign ownership limits for listed companies. It comes after the Saudi Capital Market Authority (CMA) last week announced the opening of the market to all categories of foreign investors, enabling them to invest directly as of 1 February 2026. This eliminates the Qualified Foreign Investor designation and the need to meet qualification requirements.
It also eliminates the regulatory framework governing swap agreements, which were used to enable non-resident foreign investors to obtain economic benefits only from listed securities, and allows direct investment in shares listed on the Main Market.
The amendments will make Saudi equities accessible to a greater number of investors and are “expected to contribute to attracting additional international investments,” the CMA said. Saudi Arabia’s plan to end foreign ownership limits in the $2.3tn market is meant to serve the same purpose, yet more sustainably and on a wider scale. The CMA has yet to decide whether to remove the cap gradually or all at once. Either way, it seems all but inevitable.
Foreigners are currently permitted to hold up to 49% of a listed company in Saudi Arabia. Removing this limit, potentially this year, will allow them to hold majority stakes for the first time. The Saudi market reacted positively when the move was first reported by Bloomberg in September. “It will certainly make the Saudi market more attractive to investors,” said Tim Callen, a visiting scholar at the Arab Gulf States Institute in Washington, speaking to Al Majalla.
A ramp-up in initial public offerings (IPOs) is among the expected ramifications. Saudi Arabia’s main market saw 13 IPOs in 2025 and 14 in 2024. “More investors and more liquidity may make it more attractive for business owners to pursue IPOs,” said Callen, a former IMF mission chief for Saudi Arabia.
Pressure and fears
The move is set to boost not only the Saudi stock market but also the Vision 2030, which aims to diversify the economy away from oil. The 2025 budget deficit is estimated at 5.3%, a financing gap widened by significant spending on tourism, entertainment, and large-scale infrastructure projects under the national plan.
Alongside regional geopolitical tensions and recent production increases by oil-producing nations, the effective US takeover of Venezuela’s oil wealth will likely keep prices low for longer, which will not help the Saudi budget. The influx of foreign capital into Saudi Arabia could help offset low oil prices, which have mostly traded below $70 a barrel since the second half of 2025.
