Saudi Stock Exchange opens up to foreign investment: aluminium sector shines

The Tadawul, popularly known as the Saudi Stock Exchange opens doors to direct foreign investment in Saudi Arabia.

Foreign investors who have more than £5bn reported assets supported by a five year track record can now invest directly, investment limited to overall 10 per cent of the Tadawul’s value.

It will also allow single stock ownership up to five per cent of a listed company, with a total foreign ownership of 20 per cent. Investors will also be able to participate in initial public offerings on a case-by-case basis.

For foreign investors, there is no dearth of untapped opportunities in the kingdom. Although Saudi is synonymous with oil production, the kingdom’s investment and business options are no more limited to petrochemicals. Aluminium sector has invited notable foreign investment to Saudi Arabia.

Maaden, one of youngest and fastest growing mining companies in the world, last year produced the first aluminium beverage can from Saudi rock.

With 300bn cans manufactured globally each year the growth potential is clear – specifically in emerging markets. With the availability of vast indigenous deposits of bauxite and cheap energy sources, Saudi intends to become a global aluminium giant.

The Ras Al Khair complex in the Kingdom’s Eastern Province is a notable example of direct foreign investment. This $10.8bn joint venture between Maaden and US-based aluminium giant Alco is one of the few truly integrated facilities globally, operating in the total value chain from bauxite mine to rolling mill. This is unlocking an opportunity for diversification from the over dominance of oil.

Alcoa estimates that by 2025 every leading automaker will have an aluminium body programme in place to lower fuel consumption. This opens up avenues for the production of automotive sheets used in car assembly.

Major car manufacturers are already tapping the benefits of investing in Saudi Arabia. Jaguar Land Rover, part of Tata Group, is reportedly considering opening a manufacturing plant in the Kingdom. Gulf Cooperation Council (GCC) has a record of one of the highest ratios of cars per household in the world. Saudi has the advantage of being a part of GCC and it is positioned conveniently at the crossroads of international trade routes between East and West.