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The number of listed companies in the market started with 46 in 1986 and had increased remarkably to 146 in 2010(Based on SAMA Report 2013, cited in Alshammary 2014). Currently, the Saudi stock exchange has about 170 listed companies with market capitalization estimated at 2 trillion riyals (Al-Ghamdi 2015). The government owns a majority of these companies. It controls 37% of the total market (Azzam 1997). According to Al-Ghamdi (2015), the chief executive officer (CEO) of the Saudi financial market private and government institutions owned 58% of the Saudi stock exchange market, noting that it reversed commonly held views. For instance, in the electrical and communication sectors, the government owns 76% and 70% respectively (Al-Dohaiman 2008). In the Saudi Arabia Basic Industries Corporation (SABIC), the largest public company in Saudi Arabia and listed company in the Middle East, the government still owns 70% of its shares (Azzam 1997). The government also owns 21.7% of Riyadh Bank, 22.9% of Saudi American Bank, and 21.5% of Saudi investment Bank (Argaam 2013). This proportion of government ownership is similar to other developing countries in the world. The state in Singapore for example owns 45% of traded firms (La Porta et al.1999). Likewise, state ownership in New Zealand reached to 25.35% and in Spain 30% (Alajlan 2004).

The largest shares were held by rich families and individual investors with 34% of the total market (Al-Ghamdi 2015). There are 21 companies on the Saudi stock exchange market belonging to one person or one family. The largest owner is Prince Al-Waleed Bin Talal who owns 95% of the Kingdom Holding Company estimated at 74.11 billion KSA Riyals of market value and he is one of the major shareholders of the Saudi American Bank (Alajlan 2004; Argaam 2013). The second largest owner is Suleiman

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Bin Abdul Aziz Al-Rajhi, estimated at 21.46 billion Riyals of market value (Argaam 2013). The third owner is Olayan Financing Company owned by the Saleh Kamel and Olayan families. They hold 16.9% of Saudi British Bank, 21.8% of the Saudi Hollandi Bank, and 5.8% of the National Industrialization Company which is estimated at 11.03 billion Riyals of market value (Argaam 2013). Family ownership and control in traded firms is widespread in Western Europe, South and East Asia, Latin America, the Middle East and Africa (Burkart et al. 2003; Claessens et al. 2000; La Porta et al. 1998; La Porta et al.1999). Comparing Saudi Arabia to other countries, family ownership in traded firms in Argentina is 65% and Hong Kong 70%. Some countries have smaller percentage than the Saudi market such as Singapore with 30%, Canada 25%, Norway 25% Spain 15% and the U.S. 20% (La Porta et al.1999). Therefore, this comparison indicates that the proportion of family ownership in the Saudi firms is average.

Although the ownership of individuals makes up 34% of the Saudi stock exchange market they represent 89% of the monthly volume of trading (Al-Ghamdi 2015). The statistic of the first half of 2015 showed that individual sales exceeded the size of purchase by 21.8 billion riyals. At the same time, the stockexchange market increased by 15.27%, which indicates individual investors decision was mostly wrong and thus did not benefit from the local market growth (Alistithmar 2015).

In terms of foreign ownership in Saudi firms, Tadawul statistics showed in 2015 that foreign investors, including owners and swaps, hold only 4.8% of the total market. 1.18% out of 4.8% is owned through swaps in strategic investments in the banking and insurance sectors (Devassy 2015). 22 companies out of the 170 companies listed on Tadawul have more than 10% of total foreign ownership, while 31 companies have more than 5% of total foreign ownership (Devassy 2015).

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According to the recent reports published by Tadawul at the end of June 2016, total foreign ownership in all categories, whether residents or non-residents including interests under swaps account for about 4.21%. The diagram below represents the ownership of foreign investors in each sector based on this report; it indicates that the bank sector was the highest sector where foreign investors owned over 15%, followed by the insurance companies sectors where foreign investors owned over 11%. Foreign investors represented around 6% of the retail sector, followed by 4.37% of the petrochemical industries sector and 4.31% of the transport sector. Their investment in the remaining sectors ranges from 3.26% in the agriculture and food industry to 0.41% in the energy and utilities sector which is considered the lowest amount. Therefore, foreign investors are keen to invest their money in the safest and beneficial sectors which suggest a positive and negative effect associated with the most important sector like bankssector to the local economy including the stock market. As the bank sector has the strongest weight in the index estimated at 28.9 % (Tadawul 2016) it may be assumed that the bank sector is a double-edged sword. There is no doubt that the main concern of foreign investors is to generate profits.

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Foreign Investors in the Saudi Stock Exchange by Sectors 2016

Source: Tadawul

Foreign players now have sizable holdings in 12 companies mostly through strategic investments. They have investments scope of less than 20% because the maximum limit for QFIs and their clients is 20%. However, combined institutions are allowed to have total foreign investments of 49% of a company. For example Saudi Hollandi Bank already has foreign holdings of 42%, leaving only a 7% stake available for QFIs to acquire (Devassy 2015). Interestingly, foreign ownership is most apparent in the banking sector where seven out of 12 have foreign ownership ranging from 5.41% to 41.22 (CMA 2016l).

There are five companies that do not have any allowance for foreign investors- Jabal Omar, Makkah Construction, Knowledge Economic City and Taiba. These companies have government contracts to build the holy cities of Makkah and Madinah. Nevertheless, the National Shipping Corporation of Saudi Arabia already has a 0.59% foreign stake even though it is not permitted to have any foreign ownership (CMA 2015b). Currently, the rate of foreign investments is quite low, but it is expected that after possible inclusion of Saudi Arabia into the MSCI emerging markets index, foreign

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investors will increase as they become more confident in the Saudi stock exchange market.