Strategy Note / Saudi Arabia

2020 Saudi Equity Strategy

We expect 2020 to be a more positive year for the Saudi economy, with stronger growth driven by the non-oil sector as a result of progress on the Vision Realisation Programs (VRPs) and the domestic investment of the proceeds of the Saudi Aramco IPO. OPEC+ aiming to create equilibrium between oil supply and demand should ensure stability for government oil revenues in 2020. Nonetheless Saudi’s commitment to OPEC+ is expected to impact Saudi oil GDP. Upside could potentially come from further progress on the US/China trade negotiations, with a positive outcome boosting global GDP growth and hence oil demand. 

We believe consumer sentiment is improving, supported by the overall trends of economic recovery. We expect higher consumer spending as a result of the extension of cost of living allowances and additional entertainment options. Moreover, lower interest rates are expected to support overall loan growth and overall earnings of banks. Execution of VRPs, progress on Mega Projects and Ministry of Housing initiatives should support the construction sector. We do not envisage any new taxes in 2020.

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