The global landscape for foreign direct investment is fracturing along divergent policy paths, with major economic blocs tightening security-based screenings while key emerging markets liberalize to attract new capital. The European Union and Saudi Arabia have both announced significant policy shifts this month that exemplify this growing divide.

 

In Europe, a near-final version of a new EU Foreign Investment Screening Regulation was published on February 17, 2026, which will replace the existing 2019 framework. According to a report by White & Case, the new rules will mandate that all EU Member States require prior authorization for certain foreign investments, aiming for greater harmonization across the bloc. Crucially, the regulation redefines a reviewable foreign investment to include those made by EU-based companies that are controlled by foreign entities, significantly broadening the scope of transactions subject to scrutiny. The new regulation is expected to be formally approved in April or May 2026 and will likely apply fully by early 2028 after an 18-month transition.

 

In stark contrast, Saudi Arabia has moved to ease restrictions on foreign investment. As of February 1, 2026, the Kingdom has opened its stock market to all categories of foreign investors by amending its Rules for Foreign Investment in Listed Securities, law firm Pinsent Masons reports. The new rules eliminate the need for foreign investors to be pre-qualified under the former Qualified Foreign Investor (QFI) regime. This change is expected to significantly broaden access to one of the Middle East’s most dynamic capital markets. Despite the liberalization, some restrictions will remain, including a 49% cap on aggregate foreign ownership in any single listed company and a 10% limit for most individual non-resident foreign investors.

 

These opposing moves highlight a critical tension in global trade policy. While the EU is prioritizing a unified, security-focused approach to FDI, Saudi Arabia is focused on economic diversification and attracting a wider pool of international capital. For investors, this creates a more complex and fragmented regulatory environment, requiring careful navigation of both tightening controls in developed markets and new opportunities in liberalizing economies.

 

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