The Capital Markets Authority of the Kingdom of Saudi Arabia announced yesterday that its Riyadh-based Tadawul stock exchange is now open to foreign investment. Institutional investors with five years experience and more than $5 billion in assets under management may now acquire up to 20 percent of the shares in any listed company. Single foreign investors may own up to 49 percent in the majority of stocks on the exchange while a few are still restricted to Saudi nationals. The Tadawul stock exchange is the largest in the Middle East with a market cap of more than $500 billion. In a statement published on May 4, a spokesman for the exchange said that many observers expected the entrance of foreign investors in the market through investing in listed companies would be gradual since some investors would wait until the market is included on global indices. It is expected that the number of QFI-qualified foreign investors investing in the Saudi market will increase after that, the statement said. MSCI, the benchmark stock index provider, expects to examine the market for inclusion in its regional indices. This could be an important step to attract capital to the exchange. The exchange's spokesman said that the objectives of this move are to promote institutional investment through the entrance of specialized foreign investors in the Saudi capital market, which would contribute in market stability and reduce volatility.