Riyad Capital: Our outlook is positive for the Saudi stock market, interest rate cut will positively impact performance

Riyad Capital revealed its positive outlook for the Saudi stock market in 2025, stating that despite recent volatility in local, regional, and global markets, the Nasdaq Composite Index is expected to achieve low-to-mid single-digit growth during 2025. The Nasdaq Composite Index is trading at a forward P/E of 14.8x, a significant discount compared to its average over the past five years.

Riyad Capital expects earnings growth in 2025, led by the banking, telecommunications, technology, and healthcare sectors, in addition to newly listed companies. Despite expected inflationary pressures due to customs duties, it is likely that two interest rate cuts will occur by the end of 2025, which will positively impact market performance. She added that the momentum of initial public offerings (IPOs) in the main and growth markets is expected to continue throughout 2025. Three IPOs have already been completed in the first quarter of 2025, and it is worth noting that the listed companies belong to diverse sectors, including manufacturing, financial services, and aviation.

She added that although the average daily trading value in the first quarter of 2025 declined by 34% year-on-year to SAR 5.9 billion, liquidity is expected to improve during the second half of the year, especially with improved market sentiment and reduced levels of uncertainty.

She indicated that the oil sector of the economy may face challenges due to the decline in crude oil prices. According to its internal estimates, the average price of Brent crude for 2025 is estimated at approximately $68 per barrel.

Riyad Capital estimates that overall GDP growth in 2025 will exceed 3%, while non-oil growth will remain strong and exceed 4%. Population growth plans remain unchanged, and recent data indicates an increase in the number of expatriates arriving in the Kingdom, which will support demand for housing, goods, and services. She added that inflation remains under control, with the consumer price index expected to reach around 2.5% in 2025.