Saudi market well positioned for strong performance in 2026: SNB Capital

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SNB Capital said 2025 stood out as an exceptional milestone, driven by broad optimism, accompanied by excessive confidence and a tendency to overlook economic shocks.
 

The research firm noted that 2026 will represent a transitional phase that may require balancing ambitions with reality.
 

In a report, SNB Capital stated that the Saudi market has the potential to deliver a strong performance in 2026, supported by renewed correlation with global markets, ample liquidity, and oil prices. This outlook is further reinforced by the implementation of the third phase of Vision 2030 and attractive valuations (0.5 standard deviations below the 10-year average).
 

The acceleration of infrastructure projects linked to the 2034 FIFA World Cup, Expo 2030, and the 2027 AFC Asian Cup, alongside ambitions in artificial intelligence (AI) and a focus on tourism, will create additional opportunities and catalysts extending beyond 2026.
 

The Saudi economy, according to the report, is expected to grow by 4.7% in 2026, supported by a sharp increase in oil GDP of 8% and non-oil GDP growth of 4% year-on-year (YoY). Consumption is expected to continue growing, driven by higher employment levels and lower interest rates.
 

The completion of projects valued at SAR 305 billion (6.4% of GDP) will help strengthen the non-oil economic base and act as a catalyst for further expansion across various sectors.
 

SNB Capital expects market earnings to grow by around 5% YoY in 2026. It also forecasts profits in the petrochemicals sector to rebound, given the large one-off losses recorded in 2025, despite ongoing sector challenges, while the energy sector may see a modest increase of 2%.
 

The research firm predicts a 20% YoY increase in the information technology sector, tourism (20%), and healthcare (16%). Bank profits are expected to rise by 5%, supported by loan portfolio growth and operational efficiency despite margin compression, while the telecommunications sector is expected to grow by 7% due to strong growth in value-added services and the commencement of some large contracts in the second half of 2026.
 

Tadawul All Share Index (TASI) is likely to trade between 10,000 and 11,700 points in 2026, given the significant decline in valuations during 2025, implying a dividend yield of between 4.4% and 5%. The index will likely return to 12,800 points if valuation multiples revert to normal levels.
 

SNB Capital explained that its bottom-up methodology based on target prices indicates a fair value for the index at 12,000 points, with a P/E ratio of 16.1x.
 

While maintaining a positive outlook on the banking, telecommunications, information technology, and tourism sectors, SNB Capital said it does not favor specific sectors, given the attractive valuations across the market.
 

Finally, the research firm identified the key catalysts for 2026 as interest rates, oil prices, liquidity, tourism, real estate sector reforms, as well as spending on infrastructure and AI.