Saudi stock market ‘will rebound from 2025 losses’

Earnings growth in Saudi Arabia’s main market, the Tasi, is expected to be in the mid-single digits as it recovers from its 2025 losses, according to investment manager Riyad Capital.

“We expect the Tasi to experience bullish sentiments in 2026, primarily driven by the liberalisation of the foreign ownership limit,” Riyad Capital said in a report.

The market movement is likely to depend on changes to foreign ownership limits, with estimated inflows of $10 billion to $15 billion.

The positive sentiment will also be supported by lower interest rates, with the three-month Saudi Arabian interbank offered rate projected to fall to 4.2 percent and the reverse repo rate to 3.25 percent by the end of 2026, alongside corporate earnings growth.

The market will move beyond the “overstated and oversold concerns over oil” after crude ended the year at $61 per barrel, down 18 percent.  

Riyad Capital expects the overall economic growth at 4.3 percent, underpinned by a 4.5 percent expansion in non-oil activities.

The investment manager expects a 5 to 10 percent improvement in stock market volume this year, supported by better liquidity, attractive equity valuations and an increase in the number of listed companies across more diverse sectors.

The Tasi underperformed global markets in 2025 with a near 13 percent decline compared to emerging markets’ growth of just below 31 percent and the world at close to 20 percent. 

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The fall in crude prices weighed on Tasi’s performance, Riyad Capital said.

According to a report by the Saudi Exchange, the total market capitalisation at the end of 2025 reached SAR882 trillion ($235 trillion), dropping 14 percent year on year.

The total value of shares traded reached SAR130 trillion by the end of 2025, down 30 percent year on year. The total volume of shares stood at 57.11 billion, down 17 percent from the previous year.