Morgan Stanley: Saudi Arabia's lifting of foreign ownership caps on stocks returns to the forefront

The bank clarified that any adjustment to foreign ownership limits in the MSCI indices during the November review requires the revised percentage to take effect before the final two weeks of October, which is the deadline for setting the reference prices for stocks included in the review.

According to Morgan Stanley estimates, raising the maximum foreign ownership limit in Saudi shares to 75 percent could attract approximately $4.3 billion, while a complete removal of restrictions could lead to inflows estimated at around $7.4 billion.

Al Rajhi Bank stands out as the stock most likely to benefit from this potential change, with Morgan Stanley estimating additional inflows ranging between $2.1 billion and $4.6 billion.

Hisham Abujamieh, Senior Advisor at Naif Al Rajhi Company, predicted that easing foreign ownership restrictions and fully opening the Saudi market would be among the top files on Mazen Al-Sudairi’s agenda as the new chairman of the Capital Market Authority (CMA) before the end of this year.

Abujamieh stated that the CMA alone does not have the authority to raise foreign ownership percentages in banks and companies subject to other regulatory bodies, including the Saudi Central Bank (SAMA).

The CMA had previously approved opening the financial market to all categories of foreign investors and enabling them to invest directly, starting from early February 2026.

The CMA Board of Directors approved a draft regulatory framework allowing non-resident foreign investors to invest directly in the main market, making the financial market, across all its segments, accessible to various categories of investors from around the world for direct entry.

It is worth noting that the maximum allowed foreign investor ownership is 49 percent, with the exception of certain companies with strategic foreign investments, such as the National Bank of Kuwait, AlBilad, and Alawwal Bank.

Abdulaziz Abdulmohsen bin Hassan, a member of the CMA Board of Directors, previously indicated that ownership limits that currently prevent foreign investors from holding majority stakes in local companies are under review.