Tadawul wants Chinese money in Saudi equities, debt, and listings

Tadawul is going after Chinese capital across equities, debt, cross-listings, and capital raising, moving past the exchange-traded fund links that have defined the relationship so far, the exchange group said in a press release. The next phase will connect Chinese investors to Saudi issuers, open new funding sources for local companies, and pull Chinese firms into listing in the Kingdom.

ETFs were the proof of concept: Saudi-tracking ETFs were launched in Shanghai and Shenzhen in 2024, while the Kingdom listed ETFs tracking Chinese securities traded in Hong Kong, said CEO of Saudi Exchange Mohammed Al Rumaih.

The caps are the ceiling. Foreign investors remain limited to holding 10% of any listed company and 49% in aggregate on a SAR 9.44 tn (USD 2.5 tn) stock market. Morgan Stanley puts c. USD 4.3 bn of passive inflows on a move to 75% — and that money arrives mechanically, whether or not anyone actually wants the stock. “Increasing the ownership limit has the technical consequence of increasing the weights of the MSCI Emerging Markets Index and others, which should at least drive some passive inflows, as we have seen from similar ownership limit hikes in other Gulf states, even if actual foreign ownership (and indeed freefloat) ratios remain far lower,” Justin Alexander, GCC economist and director of Khalij Economics, tells EnterpriseAM.

REMEMBER- Earlier this year, the main market was opened to all foreign investor categories, scrapping the Qualified Foreign Investor framework and swap agreements.