A mirage or a new market? DNB AM visits Saudi Arabia

DNB AM joined other international investors to meet Saudi Arabian companies in Riyadh this November. We met with companies operating in the financials, information technology and consumer sectors, as well as the Public Investment Fund of Saudi Arabia. DNB AM completed 17 meetings over three days and left the country filled with impressions from a market that is little discussed in the Nordics.

Saudi Arabia has captured significant international attention in the past years. Saudi Arabia has been included on the MSCI Emerging Markets Index since 2019, and the weighting of Saudi-listed stocks on the index has doubled since then. The country is seeking to establish itself as a significant regional hub for investment and international diplomacy, all the while remaining a very polarising country in Norway and beyond.

Saudi Arabia, long viewed as a theocratic Petro-state is in the midst of an ambitious albeit lofty national project. Dubbed “Vision 2030”, the strategy for the diversification of the Saudi economy away from its dependence on petrochemicals is well on its way and international investors are taking note. Saudi Vision 2030 is a government program that aims to diversify the economy and society of Saudi Arabia. While the vision has been praised for its ambitious goals, others have pointed out the weaknesses of the program, such as its reliance on new megaprojects. However, one thing is for certain, the moonshot nature of the strategy is already drawing significant investment activity from both the Saudi government and international investors.

Reform in Saudi Arabia has been drastic, but our impression was a country in transition between two worlds. Firmly present was the strong influence of the state and national tradition, but there was also an immense optimism surrounding the internationalisation amongst Saudi business. Significant social reforms have been made considering the rights of women in the country, yet significant challenges remain. There remain parallel realities in the country where there is a advancement of the rights of the women and increased company transparency, but also a significant concentration of power for Saudi leadership under the rule of Crown Prince Muhammed Bin Salman.