Address
Riyadh, Saudi Arabia
You can buy shares of companies like Apple and Microsoft while in Saudi Arabia, through a licensed broker that gives you access to the US market. This guide explains the path from the beginning, even if you haven’t bought a single stock before.
What are US Stocks?
US stocks are ownership stakes in companies listed on US stock exchanges. When you buy a stock, you become a junior partner in the company, and you profit in two ways: if the stock price rises above your purchase price, or if the company distributes a portion of its profits to shareholders.
The two most famous exchanges in the United States are:
- New York Stock Exchange (NYSE): The largest stock exchange in the world by market capitalization of listed companies, and it includes established companies in sectors such as industrials, consumer goods, and healthcare.
- Nasdaq: An electronic exchange where technology companies are concentrated, such as Apple, Amazon, and Nvidia.
Why is the Saudi Investor Interested in the US Market?
The most prominent reason is diversification. The Saudi market is affected by specific sectors that hold significant weight in the index, such as banks, energy, and basic materials. The US market gives you the opportunity to invest in sectors not locally available at the same scale, such as software, semiconductors, and biotechnology. When you diversify between the two markets, your portfolio does not rely on the performance of a single economy or a single sector.
There is an advantage that many overlook: the Riyal is pegged to the US Dollar at a fixed rate, so the Saudi investor is not exposed to exchange rate fluctuations when investing in dollars, which is a risk borne by investors in many other countries.
On the other hand, there are things you must take into account before starting: the time difference, transfer and commission fees, the US tax on dividends, and the necessity to verify the Sharia compliance of companies if that matters to you. We will explain each of them in detail.
Steps to Invest in US Stocks from Saudi Arabia
- Choose a licensed broker: It is better to be licensed by the Saudi Capital Market Authority, and you can verify this through the list of capital market institutions on the Authority’s website. Many investment arms of local banks and brokerage firms offer global markets services.
- Open an investment account: You will usually need a National ID or Residency permit (Iqama), a bank account, and to fill out a “Know Your Customer” (KYC) form that asks about your experience, income, and investment goals.
- Activate the US market service and sign the tax form: Non-US persons are usually required to fill out a W-8BEN form issued by the US Internal Revenue Service (IRS), which proves that you are a foreign investor.
- Transfer the amount: Riyals are usually converted to dollars within the platform.
- Search for the stock and execute the order: Write the company’s ticker symbol (like AAPL for Apple), specify the number of shares and order type, then execute.
What is the W-8BEN Form and Why is it Required?
The form is briefly a certificate proving that you are not a tax resident in America. According to the US IRS, it is used by a foreign individual to establish that they are the beneficial owner of the income, and to claim a reduced tax rate if there is a tax treaty between their country and the United States.
The practical point here relates to cash dividends. If the broker does not have a valid form, a default withholding rate of 30% is applied to dividends. So if you buy a dividend-paying stock, expect a portion of it to be deducted before it reaches your account, and ask your broker about the rate that applies to you. As for profits resulting from the rise in the stock price when sold, they are not subject to this withholding in the same way. The form is not permanent, as it remains valid until the end of the third calendar year after signing it, unless your information changes.
US Market Trading Hours in Saudi Time
The official trading session on the New York Stock Exchange runs from 9:30 AM to 4:00 PM New York time, from Monday to Friday. Since America observes Daylight Saving Time and Saudi Arabia does not, the timing changes for us twice a year:
| Period | Open (Saudi Time) | Close (Saudi Time) |
|---|---|---|
| US Daylight Saving Time (roughly March to early November) | 4:30 PM | 11:00 PM |
| US Standard Time (roughly November to March) | 5:30 PM | 12:00 Midnight |
The market closes on official US holidays, some of which are unknown to us such as “Good Friday,” and it closes early at 1:00 PM New York time on specific days like the day after Thanksgiving. Check the official holiday calendar before placing your orders.
Some platforms also offer pre-market and after-hours trading, but liquidity is much lower and prices are more volatile, so it is often limited to limit orders. As a beginner, stick to the official session.
Fees You Must Know Before Starting
Fees vary from one broker to another, so compare these items before opening an account:
- Buying and selling commission for each trade.
- Currency conversion margin from Riyal to Dollar.
- Monthly or annual custody fees, if any.
- Fees for real-time prices or market data.
- Fees for transferring funds from the platform to your bank account.
Sources
- New York Stock Exchange: Holidays and Trading Hours
- US Internal Revenue Service: Form W-8BEN
- Capital Market Authority: Licensed Capital Market Institutions
- Disclaimer: This content is educational and is not considered investment or tax advice or recommendation. Consult a licensed professional before making any decision.
