Saudi’s main stock market just logged its biggest single-day rally in five years, jumping over 5% on Wednesday, after it was reported that the Capital Market Authority is considering lifting the foreign ownership cap on listed companies. Right now, the limit sits at 49%, but that could change before the end of 2025, according to Abdulaziz Abdulmohsen Bin Hassan, a CMA board member who said the proposal is already under review and may be implemented “before the end of the year.” That news alone was enough to add $123 billion in market value to the Tadawul All Share Index, which hadn’t seen a boost like this since 2020. The entire market responded. Every industry group traded up, and Saudi banks took the lead with 9% gains. This comes after months of underperformance. As of now, the index is still down 9.6% in 2025, lagging behind Dubai, which is up 13.8%, and Kuwait, up 20%, a trend largely tied to weaker oil prices. Foreign cap rumors drive massive stock inflows The potential rule change would open Saudi’s doors wider to foreign capital, especially from index-tracking funds like MSCI and FTSE. If foreign ownership hits 100%, UBS projects that the market could attract between $9.5 billion and $10 billion in passive inflows. Victor Martin, UBS’s head of portfolio trading in EMEA, said those inflows would hit fast once the rules change. Big names like Saudi Aramco, despite being a symbol of the country’s market power, haven’t been able to hold ground. Its stock is down around 10% year-to-date, part of the broader weakness in large caps. Mohammed Ali Yasin, the CEO at Ghaf Benefits (under Lunate), pointed out that “even with the 49% cap, foreigners never really cross 15% ownership in most large caps.” But he said expectations are shifting fast. The momentum is now driven by hopes that foreigners will pour more money into these listed firms once the caps are gone, and not just small stakes. These flows could raise Saudi’s weight in global indices, pushing prices higher, and making the exchange more appealing to big international funds. This isn’t the first step either. Saudi has already tried to attract foreign investors by launching exchange-traded funds in partnership with Japan and Hong Kong. Another major shift came in January, when regulators gave foreigners the green light to buy listed firms that hold real estate in Mecca and Medina, though the law still blocks direct ownership of land in those two holy cities. Saudi momentum lifts emerging stocks as Powell pressures currencies As Saudi’s stocks ripped higher, global markets noticed. The MSCI benchmark for emerging market equities rose 0.4%, extending its winning streak to three days, now sitting at its highest level since July 2021. It wasn’t just Saudi fueling that push. Alibaba surged to a four-year high after boosting its AI investments, and Tencent followed suit. But the real weight came from the Saudi banks, which dominated Wednesday’s performance. On the currency side, it was the opposite story. Most emerging market currencies lost ground, after Federal Reserve Chair Jerome Powell struck a cautious tone in his comments. The Bloomberg dollar index rose 0.4%, as Powell said the Fed faces a “challenging situation” balancing inflation and labor market risks. That tone crushed bets for a rate cut next month, and investors backed off risk trades. In eastern Europe, the Polish zloty and neighboring currencies took a hit, dragged down by increased Russia-NATO tensions over reported airspace violations. At the same time, the Thai baht fell after new data showed the country’s export growth hit its slowest pace in almost a year, pressured by U.S. tariffs. Investors in Czech Republic kept their eyes on the central bank, which was widely expected to hold interest rates steady. A hawkish signal from the board could offer support to the koruna, one of the region’s strongest currencies against both the euro and the dollar so far this year. Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top sites
