Saudi Stock Exchange opens $585 bn stock market to QFI

The Tadawul Saudi Stock Exchange is the biggest in the Middle East. Its plans to open up, announced last year, were widely cheered by local players. But they were only approved this month, showing the slow pace of reforms in the Saudi dictatorship.

Only qualified foreign investors (QFI) holding at least $5 billion in assets will be able to invest in the market, although some exceptions could be made. They won’t be able to buy more than 5% of any firm individually nor more than 20% totally.

The Saudi Stock Exchange wants to build up one of the largest, most liquid emerging market exchanges. The country represents approximately 50% of the $1.6 trillion Gulf economy and is the 19th largest economy in the world. The market trades at a 15.5 times 12-month forward earnings multiple, close to a five-year high, Credit Suisse said. Gulf markets trade at 14.2 times and global emerging markets at 11.9 times.