Riyadh, Asharq Al-Awsat- Expatriates in Saudi Arabia will be allowed to invest directly in the local stock market Asharq Al-Awsat has learned.
“Pursuant to a directive by the custodian of the two holy mosques King Abdullah God bless him to allow non-Saudi residents to invest directly in the stock market and not only through funds,” a statement posted on The Capital Markets Authority website said.
“The authority announces that this noble directive will be enforced starting Saturday.”
Up to now, foreign residents could invest in the bourse only through mutual funds. Saudi economists estimate the expatriate community earns $35 billion a year of which $15 billion gets transferred out of the country as remittances.
In other news, no large funds were recently withdrawn from the Saudi stock market, causing it to devalue, according to Ibrahim al Assaf, the Kingdom’s Finance Minister.
Speaking on Saturday, after signing guarantees for a number of local banks that funded small and medium enterprises, the Finance Minister said economic indicators were positive despite the recent downward correction of the stock market and added that all indicators encourage investment in Saudi Arabia, whether directly or through the financial market.
“Growth is good, even excellent, compared to other countries. We had a budget surplus last year and expect the same this year… Monetary policy has led to stable prices and a stable exchange rate for the Saudi riyal.”
Last year, Saudi Arabia’s surplus was approximately 214 billion Riyals (or $57 billion). Conservative projections for 2006 estimate the surplus to be almost $55 billion.
The Finance Minister also noted that several plans exist to increase the activity of Bank al Taslif (the Lending Bank) and fund emerging enterprises once the bank’s bylaws, currently before Cabinet, are approved. Other activities will also be funded through this program, including taxicabs and a number of vocations, he added.
Al Assaf signed on Saturday a number of guarantees in favor of local banks which fund small and medium businesses. These guarantees are part of a 200 million riyal ($53 million) program launched at the beginning of 2006 to encourage the creation of more small-scale enterprises.