Saudi’s non-oil GDP is expected to grow 4.6% in 2025, on the back of investments in megaprojects and infrastructure and positive private sector sentiment, Al Rajhi Capital said in its 2025 Saudi Market Outlook (pdf). The report expects GDP growth to come in at 4.3% in 2026. Meanwhile, inflation is expected to remain stable at 2.1% in 2025 before cooling slightly to 2.0% in 2026.

Where things stand now: The latest data indicates that the economy grew a 4.3%clip in 3Q2024 , breaking a four-quarter long downward trend, which saw GDP shrink 0.3% y-o-y in 2Q 2024. The Finance Ministry recently downgraded its 2024 growth forecast to 0.8% down from its initial forecast of 4.4%.

Al Rajhi’s sectors to watch: Al Rajhi pegs banking, healthcare, ins., IT, and rental and tourism as attractive sectors for investment in 2025. On the other hand, petrochems, telecom, pharma, and retail have been relegated to the neutral zone.

The global picture: Global economic growth is expected to remain stable at 3.2% in FY 2024-25, despite monetary tightening. The US is expected to lead global economic growth, while the Eurozone is anticipated to hit challenges on the back of stagnation and weak growth in powerhouse Germany. Global inflation is expected to continue on a downward trend, declining from 5.8% in 2024 to 4.3% in 2025 and 3.6% in 2026.

THE YEAR THAT PASSED FOR TADAWUL + NOMU-

The Tadawul All-Share Index (TASI) underperformed other EM indices in 2024, growing at 0.6% — unchanged from the year prior. The broader index’s performance was mainly due to a liquidity squeeze in 1H resulting from Aramco’s USD 11. 2 bn secondary offering. Meanwhile, falling oil prices, delayed rate cuts, and increased geopolitical tensions affected the index’s performance into the second half of the year.

Small-cap stocks rode high on IPOs: The Nomu parallel market index gained 28.3% last year, outperforming TASI for a second consecutive year as strong IPO performances drove gains. Foreign investor ownership in Nomu grew to 1.51% in 2024, up from 1.22% in 2023 while Saudi institutions’ increased their ownership to 2.87% from 1.84%.

STRONG IPO MOMENTUM AHEAD-

In 2025, IPO activity is expected to maintain the strong momentum recorded in 2024, following a slowdown in 2023, Al Rajhi Capital said. The report expects listings to pick up on Tadawul’s main and parallel markets over the next two years, with 7 approved or closed transactions, and another 97 in the pipeline. Equity markets can handle 25-30 IPOs a year in 2025 and 2026, absent major secondary offerings that consume liquidity.

Saudi Arabia topped the MENA IPO league table in 2024 with over 50 listings across Tadawul and the Nomu parallel market, Century Financial’s CIO Vijay Valecha was quoted as saying by Zawya. “With over 3.5k foreign-domiciled qualified investors now in Saudi Arabia, the market is poised to remain one of the most active and diverse in the region,” he added.

The Kingdom has already seen a strong start to 2025 with the listings of Almoosa Health and Nice One at the turn of the year. “Nice One can be considered the first Saudi unicorn, opening the door for more players to take the initiative and list,” SNB Capital’s Head of Investment Banking Zaid Ghoul told Zawya.

THE IPO PIPELINE-

The Capital Market Authority has already approved several listings, including UnitedCarton Industries Company (UCIC), the Arabian Company for Agricultural and Industrial Investment (Entaj), Derayah Financial Company, the Al Rajhi–owned Ejada Systems, and the PIF–backed Umm Al Qura.

Other transactions in the market or expected soon:

  • Hotels and resorts operator Boudl has filed to go public;
  • Singapore’s Olam Group is mulling the IPO of its Olam Agri subsidiary on Tadawul;
  • Aster DM Healthcare looks set to spin off its GCC assets and seek a dual listing on Tadawul and in the UAE;
  • Nupco — a unit of the PIF — has reportedly tapped Rothschild & Co as financial advisor for its potential Tadawul IPO;
  • Budget airline Flynas is reportedly looking to go public.
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