Staff Reporter | 25 Aug, 2008
With Saudi Arabia announcing opening up of its stock market to foreign investors, Deutsche Bank said it is ready to commence offering its international clients access to the Saudi stock exchange Tadawul.

"We are delighted with the CMA's (Capital Market Authority's) historic resolution, which we believe will greatly enhance the depth and breadth of the Saudi capital market," Henry Azzam, Deutsche Bank's chief executive for the Middle East and North Africa and chairman of the board of its subsidiary Deutsche Securities Saudi Arabia, said in a statement.

"This development will undoubtedly increase foreign capital inflows to the kingdom's stock market, promote greater transparency, reduce volatility associated with dominance of the retail investors in the Saudi market, and encourage more comprehensive equity research on listed companies," he added.

The board of the Saudi CMA had Aug 20 approved a new law that would allow non-resident foreign investors to invest in Saudi Arabia's stock exchange.

Under the new law, foreign investors, whether individuals or institutional, can enter into "swap agreements" with "authorised persons" or Saudi nationals who will legally own the shares.

These authorised people can then pass on the profits, if any, to the foreign investors while retaining legal ownership of the shares listed on the Tadawul.

Till now foreigners had been denied access to the Saudi stock market, except through mutual funds.

The Deutsche Bank statement said the swap agreements would be conducted through its subsidiary in Saudi Arabia, Deutsche Securities Saudi Arabia, subject to final regulatory approval.

"There is huge demand from international investors for entry into the kingdom's markets," said Jamal Alkishi, chief executive of Deutsche Securities Saudi Arabia.

"The Tadawul has the largest number of blue chip companies in the Middle East, a market capitalisation that stands around $500 billion, constituting approximately one percent of the capitalisation of the global equity markets," he stated.

He added that Deutsche Bank was fully prepared to offer its international clients its services "as we have worked for a long time at establishing the necessary platform and mechanism".

Ricardo Honegger, Deutsche Bank's head of global markets for the Middle East and North Africa, said the opening up of Saudi markets to international investors would herald a new era for the strongest and largest economy in the Middle East.

Deutsche Bank opened its first branch in Riyadh in 2006.

In 2007 its subsidiary, Deutsche Securities Saudi Arabia, was granted a licence by the Saudi CMA to offer brokerage and custody services, as well as arranging, advising and providing investment funds management.