Riyad Capital affirms ‘positive’ outlook on Saudi market despite recent volatilities

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Riyad Capital reiterated its positive view on the Saudi market for 2025, despite the recent volatility in the local, regional, and global markets, according to a recent report.

The brokerage expects the Main Market (TASI) to see low to mid single-digit growth for 2025.

Riyad Capital anticipated profit growth to prevail among market players in 2025, led by the banking, telecommunications & technology (TMT), and healthcare sectors, in addition to newly-listed companies.

The report noted that despite expected inflationary pressures due to tariffs, two interest rate cuts are expected by the end of 2025, which will positively impact market performance.

The current IPO momentum, according to the brokerage, is set to persist in both TASI and Nomu-Parallel Market in 2025. In Q1 2025, three IPOs have already been completed in the manufacturing, financial services and aviation sectors.

Despite the decline in Q1 2025 turnover by 34% year-on-year (YoY) to SAR 5.9 billion per day, Riyad Capital forecasts the traded volume to step up in the second half of the year, particularly as market sentiment improves and uncertainties subside.

TASI trades at a forward PE of 14.8x, which is a substantial discount to the five-year average, the report stated.

Economy-wise, the Saudi oil market may face challenges due to lower crude oil prices, Riyad Capital noted, indicating that its in-house average Brent crude estimate for 2025 stands at $68 a barrel.

For 2025, the Kingdom’s overall GDP growth is seen to surpass 3%, while non-oil growth would remain strong above 4%, the brokerage added.

Saudi Arabia’s population growth plans remain in place. Recent data showed an increase in the number of expatriates coming into the Kingdom, which should drive demand for housing, goods, and services, Riyad Capital underlined.

Furthermore, the report pointed out that inflation remains under control, with the consumer price index (CPI) likely at 2.5% in 2025.

Meanwhile, Riyad Capital is positive on the Saudi banking sector for 2025, while forecasts for the energy and basic materials sectors are neutral.

The following table shows Riyad Capital’s forecasts for the Saudi market by sector in 2025:

Riyad Capital - Saudi market 29/04/2025