Despite a noticeable slowdown in the pace of initial public offerings (IPOs) during the first five months of 2025, the Saudi stock market continues to attract strategic listings, reinforcing its commitment to the economic diversification goals of Vision 2030.
The lull follows an exceptional year in 2024, with analysts attributing the current deceleration to a combination of global factors. Chief among them are the 7% decline in the Tadawul All Share Index (TASI) since the start of the year and intensifying geopolitical and trade tensions, particularly in the Middle East.
Nonetheless, investor sentiment remains cautiously optimistic, buoyed by quality offerings in high-impact sectors. A case in point is the recent IPO of flynas, which debuted on the Saudi stock exchange (Tadawul) amidst heightened regional instability, notably the escalating Iran-Israel conflict.
The airline’s listing garnered strong institutional interest, generating an oversubscription of over SAR 409 billion ($109 billion). However, its first trading session reflected market nervousness, with shares dropping as much as 12% before recovering to close at SAR 77.80, a 2.75% loss. The debut saw a flurry of trading activity, with over 12 million shares exchanged in under an hour, valued at nearly SAR 900 million.
The challenges facing regional carriers, ranging from airspace closures to route changes, have significantly inflated operational costs. Still, the IPO marked the first major listing on the main market since the outbreak of recent military tensions, underlining investor interest in key sectors despite a turbulent backdrop.
flynas floated 51.3 million shares, representing 30% of its post-offer capital, with 80% allocated to institutional investors and 20% to retail. The company’s market cap at listing was SAR 13.7 billion.
The broader IPO landscape has been quieter compared to 2024, which saw 40 offerings totaling SAR 15.2 billion, including 14 listings on the main market and 26 on the parallel market (Nomu). The Saudi bourse ranked 9th globally in IPO volume and 7th in IPO returns last year, according to the Capital Market Authority’s (CMA) board member Abdulaziz bin Hassan.
Yet despite fewer IPOs this year, the focus has shifted toward strategic sectors. The March listing of Umm Al Qura for Development & Construction (Masar), which soared 30% on its debut, highlights investor appetite for real estate plays tied to national projects. Masar’s shares climbed from SAR 15 at IPO to SAR 23 by early June.
In contrast, United Carton Industries Company, which listed in late May at SAR 50, fell to SAR 41.35 amid a 46% drop in first-quarter profits. Still, experts note the firm’s market niche in corrugated packaging gives it long-term relevance.
Commenting on market dynamics, Mohammed Al-Farraj, Senior Head of Asset Management at Arbah Capital, emphasized the resilience of the Saudi exchange. He noted that Vision 2030 continues to drive economic diversification and investor confidence, even as oil prices exert a more contained influence, mainly on energy giants like Aramco.
Al-Farraj also pointed to macroeconomic factors such as inflation and interest rates, stressing that elevated costs in housing and construction materials are pressuring real estate margins. However, expectations of interest rate cuts later in 2025 could provide a much-needed boost to real estate and financial services.
