As an ex-pat, the most significant thing you have to know is that 1 US dollar is 3.75 Saudi Riyal, which has been like this for quite a few decades. With time, resident ex-pats and foreign individuals have started realizing the benefits of investing in Saudi Arabia, primarily because of the growing investment vehicles. Multinationals having deep pockets believed in foreign investments for the longest time.
However, exciting and new options are coming up for the entrepreneurial ex-pats in various areas like investment funds, property, and start-ups.
Investment in the Kingdom of Saudi Arabia
There is no denying that the business of investment in Saudi Arabia is enormous. In 2018, KSA received SR 13 billion in foreign direct investment. Apart from that, KSA is also known for ranking 41st on the Global Foreign Direct Investment Country Attractiveness Index.
As per the reports, the government is interested in attracting more significant foreign investments in the emerging sectors. This will include health, infrastructure, logistics, education, clean energy, mining, defense, entertainment, and tourism.
In the middle of 2015, the stock market of KSA opened the doors to foreign institutional investors. As per the Ministry of Housing Approval, non-Saudis are also allowed to purchase property here.
Investing in Saudi Arabia Stock Exchange
Even when oil prices are seriously dropping, the stock exchange of KSA is responsible for dominating investment in the six-country Gulf Cooperation Council. However, international investors looking for better horizons need to know that the marketplace is ideal for deep pockets.
Tadawul or the stock exchange of Saudi Arabia allows only established institutional foreign investors to trade. To qualify, a foreign investor needs to have $5billion in asset management and needs to be in business for five years, at least.
Investors who have not reached the billionaire mark yet can invest in modest amounts in KSA. They can also invest in surrounding regions through exchange-traded funds focusing on the companies of the Middle East. For example- WisdomTree Middle East Dividend Fund (GULF), SPDR S&P Emerging Middle East, and Africa ETF (GAF).
Limits associated with direct investment in the Saudi Stocks
There are several limits associated with directly investing in Saudi Companies.
● Foreign investors cannot own more significant than 5% of shares in any single company.
● Whether residents or non-residents, foreign investors cannot own more than 49% of shares of any company collectively.
● Every qualified foreign investor is limited to only 20% of a company’s shares, along with 10% of all the claims of all listed companies on the exchange.
Ex-pats interested in investing in the stocks in KSA typically operate through the global institutions conducting business here. The international banks having offices in Riyadh are Credit Suisse Group and Morgan Stanley. These branches are the hubs for every broker and qualified foreign investor investing in the GSC nations.
There is no denying that Tadawuhl is known for its prominent role in Arab; however, only 150 companies are listed here. The primary index tracking the movements of Tadawuhl is TASI or the Tadawuhl All-Share Index. Saudi Aramco, the biggest company in the world, is also among them.
As per the Heritage Foundation, the economy of Saudi has grown modestly in the last few years because of the reduced production levels of oil and reduced prices as well, despite oil being the main product of export. However, KSA is still among the top 20 world economies and the largest Middle East economy.
This slide-in demand for oil has made the Saudis work on diversifying the economy of KSA, thereby encouraging private companies not related to oil. They are also trying to dabble in solar energy.