In a landmark move to integrate with global financial systems, Saudi Arabia has announced it will fully open its capital market to international investors starting February 1. The Kingdom's Capital Market Authority (CMA) is dismantling long-standing restrictions, signaling a bold new chapter for its financial sector and economic diversification plans.
End of the Qualified Foreign Investor Era
The CMA has eliminated the "Qualified Foreign Investor" (QFI) designation, a framework that previously limited direct market access to a select group of international entities. Under the revised rules, all categories of foreign investors can now invest directly across every segment of the Saudi capital market.
Furthermore, the regulatory body has removed the framework governing swap agreements. Previously, many non-resident investors could only gain economic exposure to listed securities through complex swap arrangements without owning the shares outright. The new amendments permit direct share ownership in the Main Market, a significant step toward full integration with global investment practices.
A Phased Approach to Financial Liberalization
The February opening is the culmination of a series of measured reforms implemented by the CMA over the past year. In July 2025, the authority simplified procedures for specific foreign investors, including individuals residing in Gulf Cooperation Council (GCC) countries and former Saudi or GCC residents, to open and operate investment accounts. This served as a confidence-building interim phase.
Subsequently, in October 2025, the CMA released a draft of the new regulatory framework on its Unified Electronic Platform for public consultation. This gradual, phased strategy reflects Saudi Arabia's intent to methodically transform its capital market into a compelling destination for global capital.
Boosting Liquidity and Economic Vision
The CMA expects these reforms to expand and diversify the investor base, attract substantial international inflows, and enhance overall market liquidity. By the end of the third quarter of 2025, international investors already held approximately 590 billion Saudi riyals ($157 billion) in the Saudi capital market. Foreign investments in the Main Market alone reached about 519 billion riyals, showing growth from 498 billion riyals at the end of 2024.
This liberalization is a cornerstone of Saudi Arabia's broader Vision 2030 economic plan to reduce the nation's reliance on oil revenues. It builds upon earlier initiatives like establishing exchange-traded funds with partners in Japan and Hong Kong and opening listed real estate firms in the holy cities of Mecca and Medina to foreign investment.
By removing barriers and streamlining access, the CMA aims to bolster confidence in the Main Market and support local economic growth. Analysts anticipate the move will significantly strengthen the Kingdom's appeal to institutional investors and portfolio managers worldwide, positioning Riyadh as a burgeoning global financial hub.
