Saudis set to open up access to bourse Saudi Arabia, the Middle East's biggest economy and the world's largest oil exporter, is expected to allow foreigners to invest directly on its $340bn stock market for the first time later this year. Direct access to Saudi Arabia's Tadawul exchange has long figured at the top of many emerging market asset managers" wish lists, given the kingdom's favourable demographics, buoyant economy and oil wealth. In 2008, the country's Capital Markets Authority allowed foreign investors to buy shares indirectly by means of "total return swaps" via licensed brokers. But many institutional investors are reluctant to use these derivatives. Further liberalisation has been rumoured for several years, but the authorities finally look set to open the door wider for international funds, senior bankers and fund managers say. "It looks like they will open up ... sooner rather than later, perhaps as early as the first half of this year or even the first quarter," said Sam Vecht, a senior emerging markets fund manager at BlackRock, the world's largest asset manager by funds under management. Some bankers remain sceptical, saying Saudi Arabia's Byzantine politics often mean reforms are slow or never emerge. Nonetheless, the authorities have been sounding out local and international banks and leading asset managers on the best way to open the market up further while retaining some control over capital flows. "The willingness is there, it's all just a case of the mechanics and getting the right safeguards in place," a Saudi official outside the CMA told the Financial Times. One model under discussion is China's "Qualified Foreign Institutional Investor" arrangement, two bankers said, which allows foreign-based funds to access the mainland bourses. Some discreet trials were even held late last year to iron out back-office issues. Any plan is likely to limit foreign direct ownership to larger institutional investors, and their maximum shareholding would be capped, according to people who have been in talks with the authorities. "They have been talking about it for a long time, but now it seems like it's concrete," said another senior international banker who has been in talks with the regulator. International access is always going to be limited in some way, but they are on the path to further liberalisation. Although Mr Vecht stressed that investing in Saudi Arabia carried risks, he said: "This is a market with enormous potential, it's one of the most exciting opportunities anywhere in the emerging markets universe."