The Saudi Arabia government has taken steps to diversify the nation's economy. The government has made it easier for foreigners to invest in Saudi stocks as part of its ambitious economic reform plan Vision 2030. Saudi Arabia is an emerging market but the Kingdom still faces some challenges in attracting funds. Nawied Jabarkhyl reports.  

Like much of Saudi Arabia, the country's stock market is opening up. Traditionally, foreign investors haven't been big buyers of Saudi stocks, but its recent inclusion in the world's top three Emerging Market indices could mean more money coming in. S&P Dow Jones says its decision to upgrade the Kingdom's exchange is down to wider reforms across the country.

DAVID BLITZER, MD & CHAIRMAN THE INDEX COMMITTEE, S&P DOW JONES INDICES "In the last couple of years, the Saudi government has taken steps to both diversify their economy and to make the market much more accessible. It is now becoming much easier to access and much more attractive to a lot of investors. And, therefore, it will become an emerging market."

As part of its ambitious economic reform plan called Vision 2030, the government has made it easier for foreigners to invest in Saudi stocks. It's cut red tape in recent years and has lowered investor requirements. Regional investment bank EFG Hermes thinks the reforms and the recent upgrades could see $30-45 billion of inflows into the Kingdom's markets in the next two years.

AARTHI CHANDRASEKARAN, VP SHUAA CAPITAL "These upgrades are extremely significant because you're talking about a few trillion dollars of assets benchmarked against the MSCI and FTSE [indices], right. So, there is a huge upside potential for Saudi, and with these upgrades materializing probably twelve months from now."

The Saudi Stock Exchange – which is known as the Tadawul – has been the best performing in the Gulf region this year. So far in 2018, it's risen almost 15%.

NAWIED JABARKHYL DUBAI "Here in Dubai on the other hand, the exchange is down over 12% in that period. And with foreign ownership of Saudi equities still relatively low, officials in Riyadh will be hoping to attract more capital away from the region's other emerging markets."

Despite the positive sentiment around Saudi stocks, there are still challenges ahead. One of those is the uncertainty around the privatization of national oil giant Saudi Aramco – with its initial public offering delayed until at least 2019. Analysts though think the Tadawul could continue its current bull run into next year. As the Middle East's largest stock exchange gets ready to join other emerging markets, it's attracting the attention of more investors around the world. Nawied Jabarkhyl, CGTN, Dubai.