TASI Market Wrap — January 2026: Biggest Monthly Gain in Four Years

January 2026 delivered what the Saudi equity market had been waiting years for. The Tadawul All Share Index closed the month at 11,382 points, up 891 points from its December 2025 close of 10,491 — a monthly gain of 8.5% that ranks as the strongest since January 2022. The catalyst was unambiguous: on January 6, the Capital Market Authority formally announced the abolition of the Qualified Foreign Investor (QFI) framework, replacing it with unrestricted direct access for all foreign investor categories from February 1, 2026.
The market's response to the CMA announcement was immediate and orderly — a rally without panic, led by institutional repositioning rather than retail speculation. Large-cap blue chips led the charge. Saudi National Bank surged 18% in the month, as foreign funds priced in an expanded free float available for index inclusion. Al Rajhi Bank climbed 10%. Saudi Aramco gained 8%, reclaiming some of the ground lost through the Q4 2025 selloff. Maaden, the mining giant, topped the non-bank gainers at 27%, followed by AMAK at 33%.
Foreign Investor Access — What the Reform Means
The structural implications of the February 1 change extend well beyond a single month's rally. By retiring the swap agreement mechanism, the CMA granted global investors identical legal protections and share ownership rights as domestic Saudi nationals. For passive index-tracking funds — which collectively manage trillions in AUM benchmarked to MSCI and FTSE indices — the change triggers mandatory rebalancing as TASI's effective free float expands.
Saudi Arabia currently holds a weight of approximately 3.3–4.2% in the MSCI Emerging Markets Index. Analysts at Jefferies estimated at the time that if the 49% foreign ownership cap on individual listed companies is eventually reviewed — a process the CMA indicated would begin later in 2026 — a further re-rating could push Saudi's index weight materially higher. The banking sector, with names like Al Rajhi Bank, SNB, and Alinma already at or approaching their foreign ownership caps, stood to benefit most from any cap expansion.
Sector Performance
All major blue chips posted gains in January. Beyond banking, the materials sector — hammered through 2025 — staged a partial recovery, with Maaden's 27% surge reflecting renewed optimism around its copper and gold production expansion timeline. Telecoms held their gains from 2025. On the downside, Naseej International Trading dropped 24%, Red Sea International fell 18%, and Thimar shed 14% — all names that had been under pressure from company-specific challenges rather than sector dynamics.
February 2026 Outlook
February 1 is the date that matters. The first full trading month under the new foreign access regime will reveal whether the January rally reflected rational forward pricing or speculative excess. Key metrics to watch: daily traded value (a sustained move above SAR 10 billion would signal meaningful foreign inflow), changes in foreign investor ownership percentages on Tadawul's weekly disclosures, and the SAMA bank lending data for January — a positive reading would reinforce the banking sector's earnings growth narrative. Near-term risk: if oil slides below $70/barrel, the macro backdrop deteriorates regardless of structural reform. Our base case for February is consolidation in the 11,000–11,500 range as the market digests January's gains, with an upside scenario of 11,800+ if foreign inflows surprise.