Azernews.Az

By Bloomberg

Saudi Arabian stocks declined after some investors said the final rules allowing foreigners access to the kingdom’s $573 billion exchange don’t have positive additions to the draft.

The Tadawul All Share Index closed 0.4 percent lower at 9,751.03 in Riyadh after gaining as much as 0.6 percent. Saudi Basic Industries Corp., the world’s top petrochemicals manufacturer by sales, lost 1.1 percent.

The Riyadh-based Capital Market Authority on Monday published regulations allowing foreign investors direct access to its market starting June 15. The investment limitations were unchanged from the draft rules released in August. OPEC’s biggest exporter is opening a stock market that’s among the least accessible to foreigners as King Salman pushes ahead with efforts to diversify the economy away from oil.

“Rules of engagement have been posted and I think it is fair to say that there are no positive surprises,” Julian Bruce, the head of institutional trading at EFG-Hermes U.A.E. Ltd. in Dubai, said by e-mail. “Investors have responded in the time-honored way of selling on the news.”

The Tadawul All Share Index is the best performer among seven major gauges in the six-nation Gulf Cooperation Council this year, rising 17 percent this year. The gauge still trades near the highest in six months.

Investors from outside the six-nation Gulf Cooperation Council currently gain entry into shares listed on the market through equity swaps and exchange-traded funds.

CMA Rules

The CMA has restricted international ownership of a single company to 49 percent, and only institutional investors with a minimum of 18.75 billion riyals ($5 billion) under management will have direct access to the stock market.

Qualified foreign investors’ holdings won’t exceed 10 percent of the market’s value, according to the CMA’s statement. The regulator set a 5 percent limit for a single QFI holding in a single stock, and a 20 percent ceiling for QFIs. The Saudi Stock Exchange will publish ownership limits for each company.

QFIs and their clients are subject to a 5 percent withholding tax on dividends, the regulator said, adding that they can vote in general assembly meetings and nominate representatives to the boards of listed companies.