Tadawul foreign access plan awaits green light

JEDDAH: Saudi Arabia’s stock market is waiting for government approval to open the largest Arab bourse to foreign investors after completing preparations more than a year ago, two people with knowledge of the matter said.
A green light from the Supreme Economic Council would be the final step in the process, according to one of the people asking not to be identified as the plans are private.
The Capital Market Authority has written a draft rulebook for international investors, and at least three banks, including HSBC Holdings Plc and Deutsche Bank, have executed test trades, three people familiar with the matter said.
Foreigners are seeking access to the Kingdom where the economy is expected to grow by 4.2 percent in 2014, the second-fastest pace in the Gulf after Qatar, economist estimates compiled by Bloomberg show.
At $532 billion, the value of shares listed on the Tadawul All Share Index is greater than those of Turkey and Ireland combined.
Investors from outside the Gulf Cooperation Council aren’t allowed to buy Saudi listed shares directly, and instead access the market through equity swaps and exchange-traded funds.
HSBC, Deutsche Bank and Saudi Fransi Capital, the investment banking unit of Banque Saudi Fransi, completed trades by prospective international investors as part of the CMA’s preparations, according to all of the people.
The trades were executed more than 12 months ago, the people said.
Saudi Fransi Capital confirmed its involvement in the tests.
Paul Harris, a spokesman for HSBC, and spokesmen for Deutsche Bank and the CMA declined to comment.
A spokesman for the Tadawul said any decision to open up the market rests with policy makers, declining to comment further.
The Supreme Economic Council did not respond to a phone call and an e-mail seeking comment.
(c) 2014, Bloomberg News.