Saudi Capital Market Opens to All Foreign Investors: Easier Access & Deeper Liquidity

Foreign capital inflows have become a critical pillar in sustaining the Kingdom's transformation agenda.

To capitalize on this momentum, Saudi has, in recent years, introduced a series of broad-based reforms aimed at encouraging cross-border equity investment and deepening liquidity across its financial markets. As a result, international investors' ownership in the capital market surpassed SR 590 billion ($157.3 billion) by the end of the third quarter of 2025.

This figure is set to soar following Saudi Arabia's landmark decision to grant all categories of foreign investors direct access to Saudi equities starting February 1, 2026.

What has changed?

• The “Qualified Foreign Investor (QFI)” gate is being removed. This means all categories of foreign investors – including non-resident individuals, retail, and smaller institutions – can now directly invest in the Main Market (Tadawul) without needing prior qualification.
• Access will follow standard onboarding channels, such as through licensed brokers and custodians, instead of being restricted to pre-approved QFI participants.
• With many global institutions already participating through QFI, the reform is focused on widening the funnel – bringing in new investor segments and setting up the market for the next wave of depth as foreign ownership flexibility expands over time.

The development is a crucial element of a series of measures intended to stimulate market momentum and channel global capital into the region's highest-yielding equity market.

Short-Term Impact: Boost in FDI Inflows and Market Liquidity

The initial market response to the historic decision saw the Tadawul All Share Index surge at the open on Jan. 7, 2026, posting its largest single-day gain since September 2025.

Lowering entry barriers and broadening the investor base may yield significant knock-on effects, such as the inclusion of Saudi bonds in major global bond indices. This would further attract foreign investment to the Saudi bourse, the Arab world's leading stock exchange with 62% market share in 2024.

Notably, the move comes six months after the Kingdom opened its stock exchange to residents of Gulf countries, allowing them to invest directly in the Kingdom's main Tadawul market. This enabled individual foreign investors who have previously lived in Saudi Arabia or other Gulf countries to continue investing in listed equities on Tadawul even after their residency expires.

Formerly, investment by the Gulf residents was limited to the debt market, the parallel Nomu, investment funds, and the derivatives market. Looking ahead, the Kingdom is expected to address the 49% ownership cap as a follow-up to its recent market-opening measures.

Analysts suggest that raising the foreign ownership limit from the current 49% to a range of 60% to 100% could attract between $3.4 billion and $10.2 billion in passive inflows from MSCI and FTSE index trackers.

Long-Term Impact of Saudi Arabia’s Capital Market Reforms: Catalyzing Business Opportunities

Over the longer term, the implications should be more profound. Greater foreign investor participation creates distinct opportunities for international businesses operating in or planning to set up in Saudi Arabia.

At the macro level, higher stock market maturity translates to expanded access to Saudi Arabia's high-growth sectors and wider talent pools, making the entire business ecosystem more conducive to foreign commercial activity.

The market opening also aligns with the Kingdom's rise as a leading regional IPO destination for a growing pipeline of high-growth startups and unicorns. Collectively, these factors position Saudi Arabia as the “Silicon Valley” of the Middle East and a high-priority market for international technology providers.

In the first half of 2025, six Saudi-based companies raised a combined $2.8 billion through IPOs on Tadawul. The robust activity seen earlier in the year carried into Q3 2025, as Saudi Arabia dominated the regional IPO market with eight listings totaling $637 million.

Beyond the equity markets, this transformation is fueling the broader financial services economy. As a result, new opportunities are emerging as demand for supporting financial services – from market research and corporate advisory to fintech, regtech, and asset management – grows proportionally.

The opening of the capital markets is also another signal of the financial sector’s continued deepening. In parallel, Saudi is seeing a growing influx of finance-focused companies establishing local presence – including the likes of Airwallex and MoneyHash, among others.

Saudi Arabia's Economic Resilience and Strong Fundamentals

One characteristic of the Saudi economy has been its remarkable resilience amid economic headwinds and shifting global market dynamics.

In recent years, Saudi has posted some of the strongest growth rates globally, with its non-oil economy reaching new records. Last year, for the first time, non-oil activities surpassed 55% of GDP in 2025.

Even more telling, FDI inflows saw steady year-on-year growth, averaging around SAR 22.5 billion per quarter in H1 2025: SAR 22.2 billion in Q1 (up 44% YoY) and SAR 22.8 billion in Q2 (up 15% YoY). In contrast, FDI outflows have trended downward as more capital remains within Saudi, reflecting increased investor confidence.

Saudi Arabia’s capital market reforms will help anchor more investments in non-oil sectors and provide substantial buffers against external pressures, reinforcing expectations of continued strong performance in the years ahead.