Saudi Arabia changes weekend
Move indicates Riyadh taking step to opening largest stock market in region to foreigners
Saudi Arabia will shift its weekend to Friday and Saturday from next week, taking the biggest Arab economy a step closer to opening its US$400 billion stock market to foreign investors.
Government ministries and monetary agencies will adopt the new weekend from June 29, aligning Saudi Arabia with the other five Gulf Co-operation Council countries, a royal decree on Sunday said.
The decision was taken based on "the economic position of the kingdom and its international and regional obligations", it said. The Saudi weekend has been Thursday and Friday.
"Investors can read between the lines and see this as another step towards opening up the market," said Fadi Al Said, a senior fund manager at ING Investment Management. "It's not official, but this is one of the things Saudi needed to do to open the markets for foreign investors."
Deutsche Bank and HSBC are among banks that have predicted the kingdom's stock exchange, the largest in the region, may open to foreigners as early as next year amid rising demand for assets.
Such a move might attract as much as US$30 billion of inflows, John Burbank, the founder of US hedge fund Passport Capital, said in February.
Non-resident foreign investors can now participate only through share-swap transactions and exchange-traded funds.
Morgan Stanley and Credit Suisse are among global banks shifting regional equities bases to Riyadh in anticipation the market will open up.
MSCI, which provides indices that are tracked by investors managing about US$7 trillion, resumed Saudi coverage last year and said it would consider including the country in frontier or emerging-market indices if it allows foreigners direct access.
This month, MSCI upgraded the United Arab Emirates, the second-biggest Arab economy, and Qatar to emerging-market status. The index provider's decision "puts additional pressure on Saudi Arabia to accelerate its qualified investor programme, and we now believe this is likely over summer", Emad Mostaque, a London-based strategist at Noah Capital Markets EMEA, said on June 12.
"Opening up to foreigners is mostly about regulation," said Tariq Qaqish, the head of asset management at Al Mal Capital.
He said changing regulation in the country could take years. Still, the weekend shift "is definitely a step forward".
The changes to the working week would "lead to greater convergence with global markets", Saudi Capital Market chairman Mohammad Al-Sheikh said.