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How to Invest in the Saudi Arabia Stock Exchange


It is without a doubt that Saudi Arabia’s stock exchange continues dominating investment in the six-country Gulf Cooperation Council. No wonder it is among the best place to invest in the Middle East. But internal investors looking for new horizons must take note: This is a marketplace only for those with very deep pockets.

Actually, investors who aren’t billionaires can invest more modest amounts in Saudi Arabid surrounding the region through any of a handful of exchange trade funds (ETFs) that focus on Middle Easter companies. Some of the most notable examples include the SPDR S&P Emerging Middle East and Africa ETF (GAF), and the WisdommTree Middle East Dividend Fund (GULF).

You should, however, keep in mind that there are limits to direct investment in Saudi stocks. For instance, a foreign investor may own no more than 5% of the shares issued in any one company. Moreover, all foreign investors may collectively own no more than 49% of any company’s shares.

It doesn’t with that since all qualified foreign investors collectively are limited to 20% of a single company’s shared and 10% of all of the shares of all of the companies listed on the stock exchange. Foreigners who would like to invest in Saudi Arabian stocks generally work through one of the global institutions that do business there.

As a quick reminder, Tadawul is the only stock exchange in Saudi Arabia and the main stock exchange among the Gulf Cooperation Council (GCC) countries. As per the Saudi Gazette, The market was mostly informal through the 1970s with only 14 companies listed. But in 1984, the government tasked a ministerial committee to develop and regulate the market.

In 2004, the government created the Capital Market Authority (CMA), the sole regulator of the market, and in 2007, the Saudi Stock Exchange (Tadawul) Company was formed. It offers equities, Islamic bonds, exchange traded funds (ETFs), and mutual funds.

If you want to invest in the Middle East, then the Saudi Arabian stock exchange market is certainly worth looking into before deciding on anything.

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