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Saudi Arabia’s Stock Market Expects an 8% Growth, Driven by Key Sectors

Saudi Arabia’s Stock Market Expects an 8% Growth, Driven by Key Sectors
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Recent reports suggested a potential 8 percent surge in Saudi’s stock market profits in 2025. Sectors like petrochemicals, healthcare, and banking will be key contributors to this optimistic outlook. 

SNB Capital’s forecast emphasized that factors like economic recovery and government initiatives encourage the shift toward broad-based market expansion. There are different factors shaping this expectation and what lies ahead for investors.

Healthcare to See a Big Rise 

Healthcare is one of the main sectors that contribute to the market profits. SNB Capital suggests that healthcare profits will rise by 23% in 2025, compared to an 11% increase in 2024. This development is linked to a 20% revenue increase due to new expansions easing pressure on profit margins. 

Currently, some government initiatives aim to privatize parts of the healthcare system, and they play a significant role. The Saudi government hopes that the private sector will represent 45% of healthcare spending by 2030. 

According to an analysis by Arabian Gulf Business Insight, this move toward privatization supports listed companies on the stock exchange. These firms witnessed stronger profit growth due to increased operational efficiency and expanded healthcare services. 

Petrochemical Industry: A Dominant Force Enhancing Market Growth 

The petrochemical industry is a key factor driving the surge after a challenging phase in 2024 marked by maintenance shutdowns. This sector stands out this year with an expected 74% profit increase.  

The sector is poised for a major comeback as these facilities resume full operations, alongside improved pricing and expanded production capacities. However, there are some challenges facing this sector, which mainly depends on unstable global energy markets. 

Despite the positive expectations, fund managers are skeptical about the potential risks in the energy and petrochemical industries.

The Banking Sector

The increased loan activity and expanded operations position the banking sector as a significant contributor to market growth.  

Banks will operate under improved conditions, benefiting from lower interest rates and rising economic activities. This will create more lending and investment opportunities.  

Riyad Capital, a Saudi Closed Joint Stock Company, supports this expectation by suggesting that declining interest rates and enhanced earnings in various emerging sectors will enhance investor confidence this year.  

Market Growth Beyond Traditional Sectors

The tourism and construction sectors are increasingly influential in reshaping Saudi Arabia’s economy. In 2023, the tourism sector contributed $118.4 billion to the country’s GDP, accounting for 11.5% of the total economy.

Recently, over 1,000 tourist activities and major events were introduced, including Riyadh Expo 2030 and the FIFA World Cup 2034.

Expo 2030 is set to drive expansion by attracting 40 million visitors and contributing approximately $94.6 billion to the economy. Meanwhile, the World Cup is expected to draw over 3.5 million visitors and generate around $35 billion.

Developments in the tourism industry have spurred construction activities. For instance, by 2030, Saudi Arabia’s hotel room pipeline may reach 320,000 rooms, with a projected development cost of $104 billion.

This anticipated growth in Saudi stock market profits for 2025 highlights resilient and dynamic economic strategies. Healthcare, petrochemicals, and banking are significant factors in this expansion; however, the tourism and construction sectors also play a pivotal role. 

Throughout this journey, Saudi Arabia will continue to face challenges, including market instability and economic crises. However, the kingdom is now working on diversifying its economy and attracting investments.

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