Good morning, wonderful people. It’s a somewhat unexpectedly busy Wednesday in the Kingdom, even as there’s no unifying theme or thread to the biggest stories of the day.

Leading our newswell this morning is Wall Street analysts’ projections for Saudi Arabia’s budget deficit in 2026, with Goldman Sachs and Bank of America in particular holding more pessimistic views than the Saudi government. The outlook comes as the banks see a year of heavy spending and record bond issuance to fund major infrastructure projects weighing on the Kingdom’s fiscal position next year.

PLUS- We had a chat with Yusef Alyusef, managing director and partner at Alvarez & Marsal in Saudi Arabia, about the drivers behind Saudi Arabia’s tax reforms, the impact of Vision 2030 on the regulatory environment, and how businesses can navigate the complexities of compliance and zakat in a diversifying economy.

^^ We have these stories and more in this morning’s newswell, below.

SOUNDBITE OF THE MORNING- Globalization has ended, giving way to a phase of fragmentation, and countries must reposition themselves to enhance resilience and adaptability amid geopolitical and technological shifts, economist and markets sage Mohamed El Erian was quoted as saying by Mubasher at a conference in Riyadh yesterday. AI, advanced sciences, and quantum computing will transform economies over the next five to 10 years, requiring policies to evolve, El Erian said.

El Erian sees two major economic trends: Locally, economies must liberalize legislation and facilitate investment rather than follow US directives. Globally, trade and investment are increasingly used as pressure tools, marking a shift to “manageable globalization.” Success in this environment demands resilience, rapid recovery, and strategic innovation, essential for local economies to implement reforms and navigate a fragmented world, he added.

FOR THE RECORD- The Riyadh-Doha high-speed electric rail link announced earlier thisweek is a separate project from the Gulf Railway, Transport and Logistics Minister Saleh Al Jasser told Al Arabiya yesterday. The high-speed train between the two capitals is dedicated to passengers and runs completely on green energy, while the Gulf Railway is set for transporting goods on traditional trains.

ICYMI- The project will span a 785-km route, linking King Salman International Airport with Hamad International Airport. Once operational, it will cut travel time between the two capitals to roughly two hours, handle more than 10 mn passengers a year, and open a corridor for medium and light goods to move more efficiently, bolstering trade flow. The project is expected to take six years to complete, creating over 30k new jobs and adding SAR 115 bn to Saudi and Qatar’s combined GDP in the process.

WEATHER- It’s another stormy day, with heavy rain and thunderstorms expected from Asir and Al Baha up to Makkah, Madinah, Tabuk, Hail, Qassim, Jazan, Al Jouf, the Northern Borders, Riyadh, and the Eastern Province. Many areas may face bouts of dust, hail, and sudden drops in visibility, while flash floods remain a real threat across valleys and low-lying areas.

• Riyadh: 26°C high / 17°C low,
• Jeddah: 28°C high / 23°C low
• Makkah: 29°C high / 23°C low
• Dammam: 28°C high / 19°C low.

WATCH THIS SPACE-

#1- BlackRock is open to partnerships with GCC sovereign wealth funds to expand its investment footprint in Asia, BlackRock’s Chief Strategist for the Middle East and Asia Pacific Ben Powell told Zawya yesterday. “We are very open minded about increasing our focus in Asian markets,” Powell said, referring to the “India bull story” in which the firm wants to be a part of, “be it through co-investments or JVs from the region.”

The firm’s 2026 GCC outlook highlights AI and infrastructure as key investment windows, as well as a growing potential in tech companies tapping capital markets to fund the next phase of AI expansion. “This is where the money is flowing and will build up to be a mainstream asset class over the next few years,” Powell added.

REMEMBER- BlackRock plans to double its investments in Saudi by 2030 after funneling more than USD 35 bn into the Kingdom so far. It is currently preparing new mutual funds while working with Saudi authorities on developing a market for residential mortgage-backed securities.

SPEAKING OF AI- Saudi Arabia is already reaping rewards from early AI adoption across manufacturing, energy, tourism, and crowd management, Fikr Ventures ’ Founding Partner Mohamad Khawaja told Asharq Business on Monday. Businesses in these sectors are benefiting from more efficiency, improved customer service, and new economic solutions, with most public- and private-sector institutions now integrating the technology, Khawaja said.

Riding the wave: The Kingdom ranks third globally in AI job growth, after India and Brazil, according to the Stanford AI Index. The vast majority of Saudi organizations’ leaders (91%) surveyed by Kyndryl’s AI Readiness 2025 report expect AI-driven labor-market restructuring within a year, with 41% saying they are prepared for AI-related external business risks.

Potential risks: Some 53% of executives cite legacy systems and weak integration as key challenges for AI adoption. Regarding external risks, cyberattacks are the top concern at 61%, with 44% saying they feel prepared. Competitive disruptions followed at 54%, with 43% reporting readiness. This comes as 76% of Saudi leaders reported a cyber-related outage this year, with human error cited as the top driver at 36%, followed by network issues and hardware/software failures at 29% each.

Skills gap persists: Although Saudi companies, universities, and national programs are developing talent in data engineering, cybersecurity, and cloud infrastructure, 94% of organizations struggle to keep pace with rapid technological change, and 35% of leaders report skills shortages.

S&P Global sees the Kingdom’s private credit financing as having substantial room for growth, thanks to a steady increase in lending activity across both the public and private sectors, the agency said in a note seen by EnterpriseAM. This positive outlook is driven by the significant financing needs linked to Vision 2030’s economic and social development goals, in addition to anticipated SME growth.

Total public and private sector debt in the Kingdom rose at a compound annual rate of 12% during 2021-2024. This growth spans a diverse range of funding sources, including bond and sukuk issuances, gradual increases in bank lending, and the rising use of private capital financing. Private capital financing — still relatively new in the Saudi market — relies on non-bank lenders providing direct loans to borrowers, with credit instruments distributed among a limited number of investors.

Still a tiny portion of domestic lending: Private credit financing accounts for only about 2% of the Kingdom’s overall lending, although it has grown almost tenfold since 2020 to reach USD 3.7 bn in 2024, according to S&P data.

BUT- Gulf allocators are stepping up exposure: The Gulf’s younger demographic profile is giving pension and institutional investors longer compounding horizons, making the region’s private credit market increasingly attractive, Monroe Capital CEO Ted Koenig tells Asharq Business (watch: runtime: 1:39). The asset class can deliver “double-digit returns” that “rival private equity,” he said, positioning it as a growing component of long-dated portfolios, particularly as liquidity builds and demand for yield stays high.

The Kingdom is likely to emerge as “one of the giants” in the asset class, he said, calling it the “next frontier” for private-credit allocations. Private credit interest has risen significantly across Abu Dhabi, Dubai, Kuwait City, Doha and Riyadh over the past five years.“The region was a sleeping giant, and it’s not sleeping anymore,” Koenig said.

Riyad Capital lined up approval from the Capital Market Authority (CMA) for the public offering of its Riyad Healthcare Equity Fund, according to a statement from the authority. The sign-off allows the manager to begin marketing the vehicle once its terms and conditions are formally published.

DATA POINT- Equity fund AUM in the Kingdom reached SAR 48.9 bn in 3Q 2025, up nearly 11.8% y-o-y, underscoring continued appetite for sector-focused public funds, CMA’s latest quarterly bulletin (pdf) showed.

DATA POINTS-

#1- Saudi Arabia holds two-thirds of the Middle East’s green finance market, with USD 12 bn in sustainable finance issuances this year, Investment Minister Khalid Al Falih was quoted as saying by Aleqtisadiah. The Kingdom is accelerating emissions reductions toward carbon neutrality by 2060 while targeting to invest USD 1 tn in infrastructure by 2030, with nearly half financed by the private sector, he added.

REMEMBER- The Kingdom has introduced a green financing framework, a sustainable debt guide, and a digital platform for carbon credit trading, including the world’s largest carbon credit auction.

#2- The Saudi Export-Import Bank (Saudi Exim) expects to close out the year having provided more than SAR 40 bn in financing, bringing the total financing it has provided since its 2020 launch to around SAR 100 bn, CEO Saad Al Khalab told Al Arabiya. About 40% of these facilities cover financing, while 60% pertain to ins. supporting exporters, financial institutions, and foreign importers.

By sector: 60% of the bank’s financing goes to manufacturing, over 20% to mining, and the remainder to services, technology, and agriculture. The bank has also extended revolving credit exceeding USD 1.5 bn to eight global exporters, facilitating trade with more than 150 countries.

MEANWHILE- The National Development Fund has, through 12 development banks and funds, contributed SAR 52 bn in one year, added SAR 47 bn to non-oil GDP, and supported thousands of projects that diversify the economy and create sustainable jobs, Vice Chairman Mohammed Al Tuwaijri was quoted by Al Arabiya as saying. He noted that the fund has financed over 800 projects worth more than USD 21 bn in 100 countries.

#3- Saudi ports had a good November: Transshipment containers handled at Saudi ports increased 8.2% y-o-y to over 162k containers in November, with total goods handled rising by 0.21% y-o-y to 17.8 mn tons, according to a statement. The Kingdom’s ports saw shipping traffic jump up by 6.81% y-o-y to 1.02k vessels, while containers handled hit 649.3k. Total vehicles handled at Saudi’s ports stood at 77.1k, while around 722.1k heads of livestock transited its ports.

OIL WATCH-

Saudi crude flows to China are set to climb in January, with allocations to Chinese refiners expected to reach 49.5 mn barrels, after Aramco cut its official selling prices for Asia, Reuters reports, citing industry sources. The volumes — roughly 1.6 mn bbl / d — mark a jump from the past two months, when allocations remained below 40 mn bbl.

ICYMI- Aramco lowered January’s official selling price (OSP) for its main Arab Light crude to Asia to USD 1.50 / bbl, a USD 0.6 premium over the Oman-Dubai benchmark, marking its lowest level since January 2021. Lower Saudi prices are expected to boost term demand from China, whose independent refiners have recently received new 2026 import quotas.

Cause and effect: The deeper price cut made the grade more attractive, while OSPs falling below spot prices further boosted demand, two sources told Reuters.

Who’s lifting? PetroChina, Rongsheng Petrochemical, and Shenghong Petrochemical are planning to lift more Saudi barrels next month, while CNOOC and Hengli Petrochemical will lift less than in the prior month, Reuters said, citing sources in the know.

MEANWHILE- India’s Reliance Industries upped Middle Eastern crude uptake to at least 10 mn bbl in January, Bloomberg reports, citing traders. Thai and Malaysian refiners also increased their purchases from the region.

Aramco is looking to kick off exports of condensates from the Jafurah gas plant in February, Reuters reports, citing two anonymous sources. Aramco could move four to six condensate cargoes a month — each holding 500k barrels — though no fixed schedule has been set, one of the sources said. The volumes will be marketed through private negotiations and buyers may receive samples before the end of December, other sources said.

A key uncertainty is how much supply Aramco will release over the next six to twelve months, Global Head of LNGs at consultancy FGE Armaan Ashraf told Reuters, noting that the Jafurah grade is shaping up to compete with heavier condensates and very light crude.

REMEMBER- Aramco started production from its USD 100 bn Jafurah gas plant last week— which holds an estimated 230 tn cubic feet (tcf) of gas, 75 bn barrels of oil, and abundant ethane for petrochemical production. The first phase came online with 450 mcf / d of capacity, with the plant’s output expected to reach 2 bcf / d by 2030.

SPORTS-

Liv Golf’s shift from 54- to 72-hole tournaments is boosting hopes the PIF-backed league could earn Official World Golf Ranking (OWGR) points before the February 2026 season, CEO Scott O’Neil told The Athletic. The change aims to satisfy OWGR standards and player demand, with O’Neil noting, “The better players want more golf. Period, end of sentence.” Since its 2022 debut, the league has operated without ranking points, limiting major championship access for stars like Jon Rahm and Brooks Koepka.

Financial snapshot: Despite investing some USD 5 bn over four years, Liv reported a USD 1.4 bn non-US loss. While 2024 revenue jumped 75% to GBP 64.9 mn, it remained dwarfed by GBP 553 mn in costs. O’Neil called the year “extraordinary” relative to previous seasons and cited “strong” board support, but acknowledged the business still has “wood to chop, and some hill to climb” to meet long-term expectations.

ICYMI-Earlier this month, the Public Investment Fund approved a USD 113 mn capital increase for Liv Golf, bringing total funding in 2025 to USD 1.1 bn and overall capital to over USD 5 bn. The increase addresses estimated operating losses of USD 100 mn per month.

Recruitment strategy: For the second consecutive offseason, Liv avoided blockbuster signings, opting instead for a youth-focused strategy — taking on Joaquin Niemann and David Puig. O’Neil emphasized finding players with “trajectory” to deepen a field that currently lacks strength beyond its top 25 stars.

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THE BIG STORY ABROAD-

Trump clears path for Nvidia chip sales to China: The Trump administration will allow Nvidia to sell its advanced H200 AI chips to approved customers in China, easing export restrictions imposed during the Biden administration. Under the new deal, the US government will take a 25% cut of proceeds — up from 15% in a prior agreement — with similar arrangements expected for AMD and Intel. The decision follows months of lobbying by Nvidia CEO Jensen Huang, who pledged USD 500 bn in US AI investments. The move has drawn criticism from lawmakers, who warned it could aid China’s military and surveillance capabilities. (Guardian | Reuters | CNBC | New York Times | Bloomberg | BBC)

AND IN BUSINESS NEWS- The European Commission has launched an investigation into whether Google uses content from websites and YouTube videos to power its AI-generated summaries and other tools without compensating creators or offering opt-outs, the commission said in a statement. Regulators are also examining if Google’s AI Mode reduces traffic to publishers’ sites. The investigation follows complaints from media groups and campaigners who say Google’s AI Overviews divert readers and threaten journalism revenues. (BBC | CNBC | Reuters | Guardian)

PLUS- Investors brace for a divided Fed: Markets expect the US Federal Reserve to cut interest rates by 25 bps today to a 3.50-3.75% range, but analysts warn of deep divisions within the policy committee — possibly the most dissent seen in years, Reuters reports. As many as five of the 12 voting members could oppose the move, raising concerns about growing politicization under President Trump, who has pushed for lower rates ahead of next year’s midterms.

ALSO MAKING HEADLINES- Ukraine and its European allies are preparing a revised peace proposal to end the war with Russia that includes a 20-point framework, security guarantees, and a reconstruction plan, which will soon be presented to Washington. (Reuters | BBC | CNBC | Guardian)