Azernews.Az

By Bloomberg

Saudi Arabian stocks retreated after OPEC’s biggest oil exporter opened its equity market to direct foreign investment.

The Tadawul All Share Index fell 0.5 percent to 9,592.36 at 12:25 p.m. in Riyadh after earlier swinging between gains and losses. National Commercial Bank, the largest publicly traded lender, led the drop with a 1.5 percent decrease, followed by Al Rajhi Bank’s 0.7 percent decline.

Approved investors from outside the six-nation Gulf Cooperation Council can now own Saudi stocks directly, as King Salman pushes ahead with efforts to diversify the Arab world’s biggest economy away from oil. Saudi Arabia’s market is worth more than all the other major GCC markets combined.

“Those investors won’t be in the market until October,” Asim Bukhtiar, the head of research at Riyad Capital, said by phone. “It will take a while to get their applications approved by the Capital Market Authority.”

$5 Billion

The Riyadh-based CMA last month published regulations allowing foreigners access starting today. Investors from outside the GCC previously gained entry through equity swaps and exchange-traded funds.

Direct trading is restricted to institutional investors with a minimum of about $5 billion in assets under management and at least five years of experience. Holdings in a single equity for one qualified foreign investor are capped at 5 percent, while QFIs holdings in a single stock is capped at 20 percent. All in all, QFI holdings won’t exceed 10 percent of the whole market.

Foreigners -- both resident and non-resident -- will be able to own as much as 49 percent of a single stock.

Saudi stocks have increased 15 percent this year, more than any Middle Eastern equity index. The gauge is trading above its 50-, 100- and 200-day moving averages.