Global investors are watching Riyadh closely as Saudi Arabia takes one of its boldest financial steps yet. After years of gradual reform, the Kingdom is moving decisively to open its capital markets to the world — a move that could redefine how global funds access, price, and participate in the Middle East’s fastest-evolving economy. 

For investors, it signals a new chapter of opportunity; for Saudi Arabia, it’s a test of whether its economic diversification can translate into true financial globalization.

Earlier this month, the Capital Market Authority (CMA) announced a landmark policy: from February 1, 2026, all foreign investors — from global asset managers to individual traders — will be allowed to invest directly in listed Saudi equities. 

The CMA Board approved a new regulatory framework enabling non-resident foreign investors to invest directly in the Main Market, removing previous eligibility barriers and expanding access across all market segments.

The approved amendments eliminate the long-standing Qualified Foreign Investor (QFI) concept, allowing all categories of foreign investors to access the Tadawul Main Market without meeting qualification requirements. They also abolished the swap agreement framework, which had previously restricted non-resident investors to indirect economic exposure.

According to the CMA, the reforms aim to expand and diversify the investor base, support capital inflows, and enhance market liquidity. The announcement builds on the regulator’s gradual approach to opening the market — including measures introduced in July 2025 to simplify account-opening procedures for foreign investors residing in, or previously residing in, GCC countries.

By the end of the third quarter of 2025, international ownership in the Saudi capital market exceeded SAR 590 billion ($157 billion), with $138.4 billion invested in the Main Market — up from $132.8 billion at the end of 2024. The CMA expects the new framework to attract even greater international participation.

The reform eliminates the long-standing Qualified Foreign Investor (QFI) framework, marking one of the most significant liberalizations in the Kingdom’s financial history.

According to a recent Sahm Capital report, the change could draw as much as $10 billion in new inflows in the short term, triggering what analysts are calling a “Saudi bull run” as institutional investors reweight portfolios toward the Kingdom. The anticipated liquidity surge, the report adds, would strengthen valuations and accelerate Saudi Arabia’s ambition to position itself as a regional — and eventually global — investment hub.

A MARKET ON THE VERGE OF TRANSFORMATION

“This is a defining shift,” says Abdulrahman Al-Malik, co-founder of Vennre, a private wealth and investment platform. 

Al-Malik continues: “Saudi Arabia is opening its capital markets while transforming the real economy at scale. This progress reflects a clear and consistent policy direction under the leadership of HRH Crown Prince Mohammed bin Salman to deepen capital markets, strengthen institutions, and attract long-term global capital.”

Tarik Chebib, CEO of Capital.com MENA, agrees that the reform represents more than a market adjustment. “Saudi Arabia’s opening is particularly significant because it sits within a wider economic transformation under Vision 2030, rather than being a standalone market reform,” he says. 

He adds that across the wider MENA region, retail market participation is already large and expanding rapidly. 

“Aggregated, anonymised data from Capital.com’s regional operations shows that MENA-based trading activity reached $804.1 billion in the first half of 2025, with the UAE accounting for the majority,” Chebib notes.

While many emerging markets promise either reform or growth, Al-Malik notes that Saudi Arabia offers both, backed by strong institutions and deep domestic liquidity. “That signal alone will drive demand into the Kingdom and materially increase the probability of high-quality technology companies, family-owned businesses, and privately held regional champions choosing Saudi as their listing venue,” he says.

He further explains that, for global investors, Saudi Arabia is no longer seen as a marginal player in the emerging markets landscape. It is evolving into a core investment market — one that requires informed analysis and long-term strategic commitment.

FROM INTEREST TO ALLOCATION 

The move removes a critical friction point which is access. But as Al-Malik points out, access alone doesn’t equal allocation.

He explains that three conditions usually turn investor interest into real capital commitments: transparent and predictable rules on foreign ownership and tax treatment, a smooth market infrastructure aligned with global standards, and sufficient breadth and depth of assets across sectors to justify long-term exposure.

“When we speak with institutional investors, we see that once they are comfortable with the framework and see a consistent pipeline of assets tied to the real economy, the conversation shifts,” he says. 

Chebib echoes this, noting that while interest is easy to generate, sustained allocation depends on consistency and depth. He explains that regulatory clarity, asset diversity, and robust infrastructure ultimately convince investors to stay.

He adds that regional investor behaviour supports Saudi’s push toward openness: “Research into regional e-trading behaviour shows that investors across MENA tend to be young and well educated, with around 86% aged between 18 and 44 and approximately 64% holding a university degree. This points to a digitally native, sophisticated investor base already engaging with global markets through regulated channels.”

As Saudi Arabia continues to align its infrastructure and standards with international norms, it lowers barriers for both global and regional capital to participate in its local markets.

LIQUIDITY, FUNDAMENTALS, AND PRICING TRANSFORMATION

As global participation deepens, Saudi equities will increasingly be priced by fundamentals rather than sentiment.

“As foreign participation grows, Saudi will increasingly be priced on company and sector fundamentals rather than broad macro assumptions,” Al-Malik says. “High-quality businesses with strong governance, clear earnings visibility, and exposure to structural growth will be rewarded with better valuations.”

Chebib notes that “greater access typically leads to more informed pricing.” As he explains, “Increased foreign participation brings broader analyst coverage, more institutional scrutiny, and more active portfolio management. Over time, this tends to tighten spreads and refine how risks such as governance, disclosure, and execution are priced.”

According to an analysis by Franklin Templeton, Saudi Arabia’s equity market is entering its next phase from a position of both reform momentum and more attractive valuations. While the Kingdom has made steady progress in opening its markets, foreign ownership remains relatively low compared with other emerging economies — around 7% as of the third quarter of 2025 — largely due to access limitations rather than weak investor interest.

Market analysts agree that this structural evolution could lower volatility and improve pricing efficiency. According to Sahm Capital, the expected inflows and diversification of participants will likely drive a sustained bull run through 2026, as benchmark-driven capital rebalances toward Saudi Arabia’s large-cap and new-economy sectors.

WHO BENEFITS FIRST 

The first beneficiaries of this market opening will be large, established companies with strong governance and visibility. Global investors tend to favor firms that meet international reporting standards and have consistent dividend policies. As liquidity builds, however, opportunities will begin to widen. 

According to Chebib, “The earliest impact is usually improved liquidity and price discovery. As foreign participation increases, order books deepen and valuations become more competitive.” Initially, he says, large, liquid, index-eligible companies — typically banks, major industrials, and leading consumer names — stand to benefit most. 

“Over time, if reforms are sustained, the benefits broaden. Corporates gain more efficient access to capital, and domestic investors gain greater choice and diversification.”

Al-Malik believes that mid-cap companies and sectors aligned with Vision 2030 — including technology, renewable energy, healthcare, and tourism — stand to gain as investors seek growth beyond traditional industries.

“Global investors bring higher expectations around governance, disclosure, and capital discipline,” he says. “That scrutiny is constructive and raises standards across the market.”

At the same time, private markets are gaining attention as investors seek earlier access and longer-term growth beyond public stocks.

COMPETITION AND CREDIBILITY 

The reform intensifies competition for capital. “Saudi companies will increasingly compete on clarity of strategy, governance quality, dividend policy, and how they communicate with investors,” Al-Malik says. “Those that adapt quickly can access deeper and more diversified pools of capital.”

Chebib agrees: “Domestically, greater openness raises standards. When investors can compare Saudi companies directly with regional peers, governance, transparency and capital discipline become more visible differentiators.” 

Regionally, he adds, the opening also changes the competitive dynamic. 

“The UAE has already made significant progress in this area; aggregated platform data indicates that a large share of active regional trading activity is currently concentrated there. Saudi brings different strengths—scale, a large domestic economy and a deep pipeline of potential listings. In practice, investors are likely to treat Riyadh, Abu Dhabi and Dubai as complementary hubs, allocating capital based on sector exposure, structure and liquidity.”

For Al-Malik, the real indicators will be stability and consistency: foreign investors maintaining long-term positions rather than reacting to short-term index events; a steady IPO pipeline that includes private and family-owned companies alongside government-related entities; and global asset managers establishing a permanent presence in Riyadh, allocating across the region from within the Kingdom.

“When capital is being raised, managed, and deployed from within the Kingdom at scale,” he says, “Saudi moves from being a big market to a regional investment hub.”

While public markets take center stage, Al-Malik believes the most enduring value creation will occur in private markets, where long-term capital builds the next generation of Saudi enterprises.

“Private markets will grow alongside public markets,” he says. “This is where long-term wealth is created, particularly when capital is deployed earlier into high-quality businesses that later access public markets.”

THE CHALLENGES THAT REMAIN 

Despite the optimism, structural limits persist. Under the current framework, an aggregate foreign ownership cap of 49 percent and a 10 percent ceiling for individual non-resident investors remain in place, according to legal analysis by Latham & Watkins. Market depth also remains concentrated in a handful of large-cap names, leaving room for diversification.

Even so, the progress is undeniable. In just a decade, Saudi Arabia has moved from limited foreign participation to near-full access, supported by consistent policy and institutional credibility. The combination of reform momentum and clear long-term direction is redefining what emerging-market evolution looks like.

Looking ahead, Chebib outlines the indicators that would signal Saudi Arabia’s emergence as a true regional investment hub: “Sustained foreign ownership beyond short-term IPO activity, a broader product ecosystem — including ETFs, derivatives, and sukuk — and regional or international companies choosing Riyadh as a primary listing venue,” he says. 

THE LONG VIEW 

Saudi Arabia’s decision to open its markets to the world is not merely a capital markets reform; it is a recalibration of how the Kingdom integrates with the global financial system.

Al-Malik believes private markets will grow in tandem with public ones, particularly as early-stage investments in high-quality companies lead to long-term value creation. 

“This is where long term wealth is created, particularly when capital is deployed earlier into high quality businesses that later access public markets,” he says. He further describes Vennres’ role as providing Shariah-compliant access to real estate, private equity, venture capital, and private credit opportunities for so-called HENRYs—high earners not rich yet—seeking to benefit from the Kingdom’s growth. 

Al-Malik concludes that these private market deals are well-positioned to generate significant upside as companies mature and go public. With Saudi Arabia emerging as a regional financial hub, the firm aims to become “the leading wealth creation platform for disciplined, long term private market investing.”