According to Saudi ArabiaÆs Capital Market Authority (CMA), non-resident foreigners will be allowed to purchase swap agreements on the Saudi stock exchange known as the Tadawul from authorised entities, though a definitive date for the start of trading was not provided. The authorised entities, nine specified brokerages including Deutsche, will own the shares but pass the profits on to the investor through a swap agreement. Deutsche would not comment on the mechanism of its swap agreements.
ôThere is huge demand from international investors for entry into the KingdomÆs markets,ö says Jamal Alkishi, CEO of Deutsche Securities Saudi Arabia. ôThe Tadawul has the largest number of blue-chip companies in the Middle East, a market capitalisation that stands around $500 billion, constituting approximately 1% of the capitalisation of the global equity markets.ö
Though foreigners will still be blocked from legal ownership, the CMA reports that foreign investors will retain ownership of their shares through authorised entities.
Deutsche Bank will sell the agreements through its Saudi subsidiary, Deutsche Securities Saudi Arabia, subject to government approval.
The opening of the Tadawul to foreign investors follows other moves by the Saudi government to open its economy to the rest of the world. The country is currently in the throes of building six economic development cities and has been privatising state-run enterprises.
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