The Tadawul All Share Index (TASI) didn’t just stumble in 2025; it underwent a fundamental repricing. The index shed 1.6k points to close the year at 10.49k — a 12.84% decline that marks its steepest annual drop since the oil price crash of 2015. The total value of shares traded during 2025 came in at SAR 1.29 tn, down 30.24% from 2024. The year closed at a market cap of SAR 8.8 tn, down 13.55% y-o-y.

What went wrong

The 2025 market correction was driven by a perfect storm of fundamental and regulatory headwinds, including falling Brent crude prices and delays in some gigaproject phases.

Heavyweights bore the brunt: Brent crude’s 19% decline weighed on energy stocks, while delays and scaling back of certain gigaproject phases rattled construction and materials, forcing investors to reassess the decade-long growth assumptions.

Speculation over foreign ownership caps fueled a short-lived 3Q rally, only for positions to unwind once the Capital Market Authority clarified no review is planned until 1Q 2026, according to CI Capital KSA CEO Fahd Al Tarzi. The amended White Land Tax also forced ultra-high-net-worth investors to liquidate holdings, he added.

The primary drag came from Saudi Aramco and Sabic. Despite Aramco’s sporadic rallies, the energy sector closed the year down 15% (with Aramco also seeing its share price falling 15% by the end of 2025), while materials shed 11%. These two giants effectively imported global demand weakness into the local index.

Conversely, banking heavyweights acted as a dam holding back the flood. Al Rajhi Bank and SNB kept the banking sector’s head above water. This came on the back of the domestic sector acting as the primary financing engine for Vision 2030, where corporate lending for gigaprojects offset weaker consumer sentiment and shielded earnings from broader economic headwinds. While debt-heavy sectors like utilities wobbled under financing costs, banks remained resilient due to strong asset quality and double-digit loan growth, which sustained their earnings even as interest rates began to shift late in the year.

But the only true alpha came from STC, which drove the telecom sector to be the sole gainer of the year (+10%), proving that in a market stripping out risk premium, the only safe haven was the defensive cashflow of digital infrastructure.

Sea of red

The psychological floor fell out of the primary market despite TASI welcoming 15 new companies. The warning signs flashed early with the listing of Nice One Beauty in January, which — despite being touted as a tech unicorn — became the poster child for the market’s new valuation sensitivity, shedding nearly 49% of its IPO price by year-end.

And the pattern didn’t let up: United Carton Industries dropped 51.43% compared to its IPO price, and Entaj fell 43.3%, just to name a few. Even sports clubs — which popped on their debut in an exciting year where Saudi saw its first IPO of sports clubs — closed the year slightly in the red. In fact, of the 250 listed companies, only 26 managed to end the year in the green. We saw one main market IPO cancellation last year by EFSIM Facilities Management.

The silver lining: Issuers raised roughly USD 4.5 bn across the main market and Nomu in2025, the strongest year for IPO proceeds since 2022, led by PIF-backed airline flynas and Mecca developer Umm Al Qura.

Nomu wasn’t spared

The NomuC index, which had climbed 28% in 2024, reversed course dramatically, shedding over 8k points to close near the 23.3k level — a roughly 26% drop.

The cancellation wave was unprecedented: Five Nomu IPOs were scrapped due to incomplete offerings, while three others saw their CMA approval windows expire. This churn signals a massive flight to quality; investors are no longer willing to fund small-cap growth stories with unclear paths to profitability. KDL Logistics defied the gloom with a 102% coverage, riding the wave of infrastructure and logistics spending that remains the government’s priority.

Are we going to see that wave reversed? Saudi Exchange CEO Mohammed Al Rumaih says 40 companies have already filed applications for IPOs going into 2026, while the broader pipeline expands to as many as 100 firms, including companies now tapping advisers.

Looking ahead to 2026

Global investors are heading into 2026 with little appetite for Saudi equities, with several major fund managers telling Bloomberg that softer oil prices, sluggish earnings expectations, and a lack of clear catalysts are keeping them on the sidelines. Meanwhile, Kamco Investment’s Junaid Ansari said the market looks “oversold,” with market price volatility suggesting that the market is more prone to move upward than downward. He also suggests that concerns about oil are overdone and that there’s upside for the banking sector, driven by robust lending and earnings growth

Tags: