KUALA LUMPUR - Saudi Arabia will open its financial markets to all foreign investors from February 1 as it moves to ease regulations and draw more overseas capital.

The country’s market regulator said the amendments approved by the Capital Markets Authority (CMA) abolish the Qualified Foreign Investor framework, which previously limited access to investors with direct and consistent exposure to the Saudi market.

The CMA said the changes will allow investors worldwide to invest directly in the capital market, supporting inflows and improving market liquidity, as reported by CNA.

The move comes as Saudi Arabia presses ahead with economic reforms aimed at reducing its reliance on oil revenues.

As part of these efforts, the kingdom has sought to attract foreign funds, including through the establishment of exchange-traded funds with partners in Japan and Hong Kong.

Regulators last year also permitted foreigners to buy shares in listed companies that own real estate in Mecca and Medina, while maintaining restrictions on direct land ownership.

JP Morgan said it expected the impact of the latest move to be limited, noting that “nearly all” institutional investors were already able to access the market.

“As a reminder, the key regulatory change that investors are expecting is the change to the foreign ownership limits, which should have some positive impact on the market,” the bank said in a note, adding that it did not expect such changes before the second half of the year or later.

Saudi equities rallied in September after reports that the CMA could ease the 49 per cent cap on foreign ownership of listed companies, a move seen as potentially reviving investor interest.

The Saudi benchmark index fell 12.8 per cent last year and is down 1.9 per cent so far this year, according to LSEG data.