Saudi Arabia’s new weekend: an overture to foreign investors
Bloomberg reported earlier this week that Saudi Arabia will shift its weekend from Thursday and Friday to Friday and Saturday starting next week, taking the biggest Arab economy a step closer to opening its stock market to foreign investors.
A similar proposal in 2007 was rejected, but the Saudi business community has been lobbying for the change so that it can harmonise its activities with regional commercial hubs, such as Dubai.
According to a royal decree, Government ministries and monetary agencies will adopt the new weekend from June 29, aligning Saudi Arabia with the other five Gulf Cooperation Council countries. The Kingdom was the only country left among the six-member Gulf Co-operation Council to persist with the old format, after Oman switched to a Friday-Saturday weekend in May.
The move is expected to put an end to the inefficiencies created by having different working days than other regional international institutions, and will align Saudi Arabia’s market more closely with regional markets. It flags the Kingdom’s desire to make itself attractive to foreign investment, something which it has struggled to do in the past. At present, non-resident foreign investors can currently only participate through share-swap transactions and exchange-traded funds.
However, banks including Deutsche Bank AG and HSBC Holdings Plc have predicted that the Kingdom’s stock exchange, the largest in the region with a market value of about $400 billion, may open to foreigners as early as 2014 amid rising demand for assets. Morgan Stanley and Credit Suisse Group AG are amongst global banks shifting regional equities bases to Riyadh in anticipation of this development.