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Saudi Arabia makes small steps to opening

07 May 2014

Saudi Arabia has yet to welcome foreign investors with open arms but there are signs on the ground that preparations are being made, writes Hardeep Dhillon

Read more: Saudi Arabia Middle East

The opening of Saudi Arabia to foreign investors remains one of the most anticipated events in global finance.

There have been many instances in the past five years when the kingdom appeared to come close to allowing direct foreign ownership of domestic equities, but so far they have all come to nothing. Could this time be different?

Saudi Arabia has restricted ownership for cultural and economic reasons, explains Abdullah Alawi, head of research at Aljazira Capital.

For some, foreign ownership of assets is not appropriate in a country containing the world’s most holy Muslim sites. For others, of a more traditional protectionist persuasion, it is about control of the economy.

In any case, the abundance of petrodollar deposits in the banking system has lowered the importance of raising money from foreign investors. There is also an air of caution and protectionism borne out of fear that hot money flows...