Foreign Buying of Saudi Stocks Hits $1.33bn Ahead of February Rule Change
RIYADH — Foreign investors made net purchases of approximately SR5 billion ($1.33 billion) in Saudi equities during January, marking the strongest monthly inflows since 2022 and underscoring rising global confidence ahead of a major regulatory shift in the Kingdom’s capital markets.
The surge in foreign buying coincided with the announcement that Saudi Arabia’s stock market would be opened to all categories of non-resident foreign investors — both individuals and institutions — allowing direct investment without conditions from early February.
According to the Financial Analysis Unit at Al-Eqtisadiah, January’s inflows represent the largest monthly foreign purchases outside of exceptional periods, such as June 2024, when Saudi Aramco conducted a secondary offering, and September 2025, following reports that the Capital Market Authority would permit foreigners to hold majority stakes in listed companies.
Since the market-opening announcement on Jan. 6, Saudi equities have rallied strongly, with the Tadawul All Share Index rising approximately 10.6 percent by the end of the month. The gains were led by the banking sector, which is widely expected to benefit from eased ownership restrictions and robust fourth-quarter earnings.
Higher oil prices also supported gains in Aramco, the largest stock by weight on Tadawul, while Saudi Arabian Mining Co. advanced following new discoveries and rising gold prices. Shares of SABIC also recovered after announcements of asset sales in Europe and the Americas, easing earlier concerns.
The regulatory amendments removed the framework governing swap agreements, which previously allowed non-resident foreign investors to gain economic exposure to Saudi equities without direct ownership. The changes now enable direct participation in stocks listed on the main market.
Market analysts noted that much of January’s foreign buying likely came from active funds already positioned in the market ahead of the rule change. With restrictions easing further, Saudi Arabia’s weighting in emerging-market indices is expected to rise, potentially triggering additional inflows from passive funds that track benchmark indices.
Foreign investors accounted for around 41.7 percent of total market purchases in January, compared with just 5.6 percent in 2018, highlighting their rapidly growing influence. The value of foreign holdings climbed to SR465.5 billion, representing 4.87 percent of the total market and 12.67 percent of free-floating shares.
The latest regulatory reforms are expected to improve market liquidity, enhance valuation transparency, expand the investor base, and deepen overall market efficiency over the long term.
Source: Arab News / Al-Eqtisadiah