RIYADH: Saudi stock market profits are set to grow by 8 percent in 2025, with the petrochemical sector driving the increase, according to a new report by SNB Capital.
Banking and healthcare are also expected to see big rises, with the industries benefiting from increased loan activity and expanded operations.
If petrochemicals are excluded from the analysis — with energy giant Aramco dominating the market — the Saudi stock exchange would see a 14 percent growth in profits.
This broad-based growth across key sectors highlights the resilience and dynamism of the Saudi economy, setting the stage for heightened market activity and increased investor confidence.
These favorable conditions have translated into a surge in initial public offerings, with strong demand from both institutional and retail investors driving significant gains in 2024.
The petrochemical field is projected to record substantial growth of 74 percent in 2025, driven by improved prices, additional production capacities, and a return to full operational activity following widespread maintenance closures in 2024.
The healthcare division is anticipated to achieve a 23 percent rise in net profits, up from 11 percent in 2024, driven by a 20 percent revenue increase attributed to new expansions that help mitigate margin pressures.
The cement sector is also poised for strong growth, supported by the acceleration of mega projects, while the car rental industry is expected to benefit from fleet expansion, operational efficiencies, and lower interest rates, though short-term rental margins could face some pressure.
Strong expectations for IPO activity in 2025 have been bolstered by lower interest rates, accelerating economic activity, and attractive investor incentives, according to SNB Capital.
Macroeconomic sentiment remains favorable, with over 85 percent of managers forecasting at least three interest rate cuts in 2025, signaling a shift toward easier financial conditions.
The report underlines a growing proportion of managers who view the market as undervalued relative to its fair worth, though a majority still consider it fairly valued at its peak.
Oil prices are expected to stabilize in 2025, with most fund managers predicting a range between $70 and $79 per barrel.
Optimism is rising across sectors such as tourism, banking, and construction, while cautious views persist for the energy and petrochemical industries as they continue to navigate challenges.
The strong market activity witnessed in 2024 lays the foundation for the optimistic forecasts for 2025, as the momentum generated by increased IPOs, rising transaction values, and sectoral recovery is expected to carry forward into the coming year.
The Tadawul All-Share Index recorded a sharp increase in IPOs in 2024, reversing a decline in the prior year.
The number of IPOs rose to 14, up from eight in 2023, with total proceeds reaching SR14.2 billion, compared to SR11.9 billion the previous year.
Institutional subscription coverage rates improved significantly, averaging 126 times in 2024 compared to 61 times in 2023, while retail subscription coverage increased to an average of 16 times from 11 times.
Market activity surged in 2024, with the number of negotiated deals reaching approximately 3,500, compared to 918 in 2023 and 1,316 in 2022, according to SNB.
Negotiated deals generally refer to transactions that are arranged through direct agreements between buyers and sellers rather than through open market auctions or bidding processes.
In the context of the stock markets, it can imply block trades, private placements, or structured deals involving large volumes of shares or assets that require direct negotiation to determine terms such as price and volume.
Although the average deal size declined to SR24 million from SR34.6 million in 2023, the total value of transactions climbed to SR84 billion, significantly higher than SR29.5 billion in 2023 and SR38.9 billion in 2022.
Major offerings contributed to increased market liquidity and a higher proportion of free-floating shares.
Among them, Saudi Aramco’s secondary offering in June stood out as the largest secondary issuance in the Middle East, Europe, and North Africa since 2000.
The offering raised SR42 billion through the sale of 1.55 billion shares at SR27.25 per share, surpassing the scale of its 2019 IPO.
Saudi Telecom Co. followed with a secondary offering in November, generating SR38.6 billion through the sale of 2 percent of its public shares, or approximately 100 million shares.
Meanwhile, SAL Logistics Services completed an IPO valued at SR6 billion, with shares expected to be distributed to shareholders in early 2025 at an estimated value of SR7 billion.
