Saudi Arabia’s initial public offering (IPO) market maintained its regional dominance in the first nine months of 2024, raising $2.6 billion and narrowly outpacing the United Arab Emirates’ $2.4 billion, according to the latest ICAEW Economic Update report.
The strong IPO performance comes as Saudi authorities continue efforts to deepen capital markets and capitalise on the region’s position as one of the strongest performing areas in the global economy. The momentum was further boosted by a significant secondary offering of shares in state oil giant Saudi Aramco, which raised $12.35 billion, with approximately 60 per cent of shares allocated to foreign investors.
The robust IPO activity reflects broader economic resilience in Saudi Arabia, despite headwinds from oil production cuts. The kingdom’s non-energy sector is forecast to grow by 4.5 per cent in 2024, helping to offset weakness in the oil sector and contributing to an overall GDP growth projection of 1.4 per cent for the year.
The ICAEW report indicates that Saudi Arabia’s capital market development is occurring against a backdrop of broader economic reforms, including efforts to attract foreign investment and diversify the economy under Vision 2030. The kingdom recently introduced a 30-year tax relief programme for global firms establishing regional headquarters in the country, which could further boost market activity.
However, the strong IPO performance comes as the kingdom grapples with fiscal challenges. Saudi Arabia recorded a budget deficit of SAR30.2 billion in the third quarter of 2024, extending its period in the red to two years. The Finance Ministry projects a full-year deficit of SAR118 billion (2.8 per cent of GDP) for 2024.
Despite these fiscal pressures, the report suggests that Saudi Arabia’s relatively low government debt levels provide flexibility to continue supporting market development through both international and local debt markets. The kingdom’s sovereign wealth fund, the Public Investment Fund, is expected to remain a strategic spender in the market.
The positive market sentiment is further supported by recent credit rating actions, with S&P revising Saudi Arabia’s outlook to positive while affirming its A rating. This comes as the kingdom’s non-oil sectors show robust growth, with the Purchasing Managers’ Index reaching a six-month high of 56.9.
Looking ahead, the ICAEW report suggests that Saudi Arabia’s IPO pipeline remains strong, with further listings expected amid continued demand. However, the report also notes that the implementation of potential US trade tariffs under the Trump administration could lead to a more fragmented global market, potentially making it harder for GCC countries to achieve their growth and diversification objectives, even though the region is unlikely to be directly targeted.
The sustained IPO activity aligns with broader regional trends, as GCC economies work to develop their financial markets amid expectations of GDP growth accelerating to 4 per cent in 2025 from 1.9 per cent in 2024.
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