Wall Street and #SaudiArabia Differ on Kingdom’s Deficit Target - Bloomberg

Wall Street and Saudi Arabia Differ on Kingdom’s Deficit Target - Bloomberg

Saudi Arabia says it can slash its budget deficit in 2026 after a year in which spending and bond issuance soared to fund huge infrastructure projects. Wall Street isn’t convinced.

While the Saudi government sees the fiscal shortfall at 3.3% of gross domestic product for next year, analysts at Goldman Sachs Group Inc. and Bank of America Corp. estimate the figure will be far higher.

Goldman predicts the gap coming in at 6%, even wider than this year’s projected figure of 5.3%. The result, according to the bank’s analysts, will be a further $25 billion of international borrowing, which would be a record for the kingdom in terms of annual issuance. Bank of America forecasts a deficit of about 5% in 2026.

The government, which published its latest spending plans last week, said revenue should recover next year, helped by a robust non-oil economy. In addition, production of oil — still the source of around 60% of government earnings — is set to be higher after increases agreed to by OPEC+.

With spending, Saudi Arabia has cut back or delayed some of Crown Prince Mohammed Bin Salman’s transformation projects, including parts of the new city of Neom, to avoid overheating the economy.

Foreign analysts, however, think the kingdom will struggle to reduce its deficit given that Brent crude is down to around $63 a barrel. Bloomberg Economics estimates Saudi Arabia needs a price of almost $100 to balance its budget.

Saudi Arabia has sold around $20 billion in dollar- and euro-denominated bonds on international markets this year. That excludes deals from the likes of the sovereign wealth fund and oil giant Aramco.

Finance Minister Mohammed Al-Jadaan, speaking last week, emphasized the government would prefer to bridge its fiscal gap by borrowing instead of running down reserves. In its favor, its debt levels amount to around 30% of GDP, lower than most other sovereigns.

He added that the government will be “very careful to not oversupply the market.”

Razan Nasser, a sovereign analyst at T. Rowe Price, which manages roughly $1.8 trillion of assets, says the market can absorb the kingdom’s levels of issuance for now.

“Harder questions may need to be asked in the medium term as they use up that space, but we are not there yet,” she said.

Still, to minimize the impact on borrowing costs, the government is likely to diversify its funding sources and may look at syndicated loans and tapping investors in Asia, according to Jean-Michel Saliba of Bank of America.

“Large and persistent issuance of Saudi Arabia external debt could weaken investor appetite and impact borrowing costs,” said Saliba, who estimates the Saudis will sell $18 billion of Eurobonds next year.

Middle East IPO Boom Fades Amid Competition From Global Markets - Bloomberg

Middle East IPO Boom Fades Amid Competition From Global Markets - Bloomberg

After four blockbuster years, the Middle East’s initial public offering boom is losing steam as valuations come under scrutiny and listings roar back in the US and Asia.

In recent months, the Gulf’s listing volumes have fallen to their lowest since the pandemic, investors have become markedly more selective, and the region’s once-reliable first-day pop has faded.

The change in sentiment was on show this week as Saudi Arabia’s EFSIM Facilities Management canceled plans for an up to $89 million listing on the kingdom’s main exchange. Saudi Arabia’s sovereign wealth fund has also slowed work on several planned first-time share sales, Bloomberg News has reported. Those moves come as the benchmark Tadawul index has dropped nearly 12% this year.

The Gulf had been a rare bright spot in recent years, buoyed by government privatizations and a push to deepen local capital markets. But lower oil prices have started to cloud the Middle East’s growth outlook, particularly in Saudi Arabia. Meanwhile, as IPO activity fired back up elsewhere, a region that thrived in a global listings drought suddenly faced competition.

Here are four indicators that show how an exuberant cycle gave way to a more measured market.

Lower Volumes

The most striking shift this year was the sharp drop in IPO volumes across the Gulf, with regional listing proceeds more than halving from $13 billion to under $6 billion in 2025.

In the UAE, listings slowed dramatically after the soft debuts of Lulu Retail Holdings PLC and Talabat Holding PLC late last year left investors more cautious. Dubai-based online classifieds platform Dubizzle Ltd. postponed its first-time share sale, a rare example of a pulled deal in the country. Oman, which had briefly outpaced London in IPO volumes in 2024, also saw activity dry up.

In Saudi Arabia, the EFSIM deal was pulled in part due to generally weaker market demand, people familiar with the matter said. Still, the kingdom’s IPO proceeds held steady compared to last year at roughly $4 billion, helping the kingdom reclaim its title as the Gulf’s busiest listing venue. But most deals came from the private sector as the government eased off on large privatizations.

“Government IPOs are large tickets, this year the market was not for this,” said Mostafa Gad, head of investment banking at EFG Hermes, one of the leading arranger of share sales in the Gulf. “Postponing the big ones was a very wise idea.”

Smaller Deals

The shift in sentiment was evident in deal size as well. Last year produced three IPOs nearing $2 billion after strong orderbooks allowed Talabat and Lulu to upsize their offerings late in the process, even though that enthusiasm didn’t carry into trading. In 2025, there was just one billion-dollar deal from low-cost carrier Flynas, and only four transactions topped $500 million.

Gulf IPOs Shrink In Size

Investors pushed toward smaller, simpler stories with clearer financials, “Anything above $500 million starts to get difficult,” said Gad, “People are not willing to navigate through a lot of complexity.”

Follow-on Frenzy

If UAE IPOs slowed, follow-ons filled the gap. Secondary share sales in the emirates climbed toward $5 billion, overtaking IPO proceeds for the first time. Much of that activity came from Abu Dhabi government-backed shareholders trimming stakes to boost free floats, liquidity and index weightings.

Even Qatar, which has largely missed the Gulf-wide share sale boom, saw rare activity: Ooredoo’s multi-million-dollar stake sale by Abu Dhabi Investment Authority became the country’s most significant ECM event in years.

Saudi follow-on volumes were more muted than last year, which was dominated by the government’s $12 billion sell-down in oil major Aramco.

Softer Debuts

Another defining shift came in performance. The 30% plus first-day jumps that had become a feature of Gulf listings started to crack in late 2024 and evaporated in 2025. In Saudi Arabia, the average listing gain turned negative, and only two of the kingdom’s ten largest IPOs now trade above offer. Broader market weakness didn’t help - Saudi equities were among the worst performers in emerging markets this year, dragged down by softer oil prices and concerns that this could dampen government spending.

Demand has also suffered in recent listings. Riyadh developer Al Ramz’s institutional investor books were only 11 times covered earlier this month, a far cry from the triple-digit oversubscription levels that were the norm months ago.

IPOs in the UAE fared better, but signs of fatigue appeared there too. Even contractor Alec Holdings PJSC - state-backed and the kind of deal that historically delivered a strong debut - traded tepidly on day one and is up a modest 3%. Dubai and Abu Dhabi’s main stock indices overall performed relatively well, but instant double-digit listing gains were no longer a given.

For some, that’s a welcome correction. “Everyone will adjust to the idea that not all IPOs will perform 30–40% on day one,” Gad said. “We’re becoming a mature market.”

HSBC’s Gulf Exits Prompt Bank to Bring in Dealmakers From the UK - Bloomberg

HSBC’s Gulf Exits Prompt Bank to Bring in Dealmakers From the UK - Bloomberg

HSBC Holdings Plc has relocated several managing directors from London to the Middle East, replenishing its ranks in a region earmarked as a priority under Chief Executive Officer Georges Elhedery.

The lender moved four London-based MD’s — Robin Brown, Ajay D’Souza, Simran Saggu and Khurram Islam — to the Gulf earlier this year, according to a person familiar with the matter, who asked not to be named as the information is private. It also hired an energy banker from Rothschild & Co. for a role in Saudi Arabia last month, the person said.

That came after oil and gas specialist Vishesh Arora and MD Parveen Garg left in recent months, people familiar with the matter said. Meanwhile, Jon Connor, a 21-year veteran and former co-head of Middle East investment banking, departed after relocating to London over the summer, some of the people said.

A spokesperson for HSBC declined to comment on the departures, but said the bank is adding staff to the region.

The reshuffle comes as competition for talent intensifies across the Gulf, where governments are deploying energy wealth to diversify their economies and spur deal activity. The region has become a priority for HSBC alongside Asia, with Elhedery shuttering the bank’s US and European advisory units to focus on faster-growing markets.

Those plans have been hampered by exits, including the recent departure of two senior bankers who advised on most of HSBC’s mandates for Middle East share sales.

Still, the bank has secured more than 25 new mandates for mergers and acquisitions and initial public offering across those markets since outlining its revised strategy, according to Samer Deghaili, co-head of capital markets and advisory for the Middle East, North Africa and Turkey.

HSBC will continue to invest in the region, including its top talent, he added. Earlier on Tuesday, HSBC said its investment bank obtained a regional headquarters license in Saudi Arabia, joining global rivals increasing their presence in the kingdom.

The Middle East has been a hub for equity issuance as governments drive privatizations to deepen local markets. Companies have raised over $5.8 billion from IPOs this year, though momentum is fading amid valuation concerns and renewed listing activity in the US and Asia.

#Qatar sovereign fund includes Founders Circle Capital in $1 bln venture programme | Reuters

Qatar sovereign fund includes Founders Circle Capital in $1 bln venture programme | Reuters

Qatar's sovereign wealth fund is adding Founders Circle Capital to its venture capital programme, making San Francisco-based FCC the seventh growth investor to take a share in the $1 billion initiative, the funds told Reuters on Tuesday.

The "fund of funds" programme was designed to lure start-ups to the Gulf Arab state and support a years-long effort to diversify its economy away from the gas production that made it rich.

"Our main priority here is to ensure that there is a sustainable venture ecosystem," the QIA's head of funds Mohsin Pirzada said. "Could it mean ultimately unicorns being established and listed? Yes, absolutely."

The initiative represents less than 0.2% of QIA's holdings, which are estimated to be worth $526 billion and span an array of businesses in sectors including technology, infrastructure, energy and finance around the world.

FCC, which manages funds worth about $1.5 billion, plans to open its first international office in Doha, although this was not a condition of inclusion in the programme, its co-founder Ken Loveless said. FCC's investments include delivery platform DoorDash (DASH.O), opens new tab, online trading platform Robinhood (HOOD.O), opens new tab and fitness tracking app Strava.

The QIA has received more than 250 applications to participate in the venture project, Pirzada said. Fund managers provided details of their forecast commercial returns and what economic impact they thought they would bring to Qatar, he added.

Those proposals were graded and allocated capital depending on their score. "If you are, for example, an A-rated proposal, then we can be up to 50% of your capital requirements," Pirzada said. Funds received amounts of $20 million to $150 million.

Previous entrants in the program include B Capital, which is jointly led by Facebook co-founder Eduardo Saverin.

QIA analysed "model cities" including London, Berlin, Singapore and San Francisco as part of its work to attract start-ups, Pirzada said. He said he expected to bring in another four to five funds over the next few months.

Most Gulf markets gain ahead of Fed meeting | Reuters

Most Gulf markets gain ahead of Fed meeting | Reuters

Most stock markets in the Gulf ended higher on Tuesday as investors looked ahead to the Federal Reserve's policy outlook and a widely anticipated U.S. interest rate cut later this week.

Recent data showed that the U.S. Personal Consumption Expenditures Price Index, the Fed's preferred inflation measure, met expectations, while consumer sentiment improved in December.

In November, private payrolls saw their steepest decline in more than two-and-a-half years, but jobless claims for the week ended November 28 fell to their lowest in three years.

According to CME's FedWatch Tool, markets are now pricing in an 89% chance of a quarter-point rate cut at the Fed's December 9–10 meeting.

The Fed's stance holds implications for Gulf economies, where most currencies are pegged to the U.S. dollar, making it an anchor for regional monetary stability.

Saudi Arabia's benchmark index (.TASI), opens new tab gained 0.7%, led by a 2.1% rise in Al Rajhi Bank (1120.SE), opens new tab and a 1.4% increase in Alinma Bank (1150.SE), opens new tab.

Elsewhere, Consolidated Grunenfelder Saady Holding Co (4147.SE), opens new tab closed 0.8% higher in its market debut.

Investor sentiment is being largely underpinned by expectations of a potential rate cut at tomorrow's Fed meeting.

The market outlook is further strengthened by solid fundamentals and ongoing expansion in the non-oil sector, said George Pavel, general manager at Naga.com.

"However, the market could remain exposed to the downside if oil markets continue to slide," he said.

Oil prices - a catalyst for the Gulf's financial markets - steadied after falling 2% in the previous session, with investors keeping a close eye on peace talks to end Russia's war in Ukraine, concerns over ample supply, and the looming U.S. rate decision.

Dubai's main share index (.DFMGI), opens new tab rose 0.8%, with blue-chip developer Emaar Properties (EMAR.DU), opens new tab closing 1.4% higher.

In Abu Dhabi, the index (.FTFADGI), opens new tab added 0.5%.

The Qatari benchmark (.QSI), opens new tab was up 0.4%, with Qatar National Bank (QNBK.QA), opens new tab, the Gulf's biggest lender by assets, rising 1.1%.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab eased 0.1%, snapping a four-day winning streak.

#AbuDhabi’s Adnoc in deal talks over oil refinery at centre of US sanctions

Abu Dhabi’s Adnoc in deal talks over oil refinery at centre of US sanctions

United Arab Emirates state energy company Adnoc has emerged as the frontrunner to buy Russia’s controlling stake in Serbia’s sole oil refinery, as Belgrade grows increasingly frustrated with Moscow’s foot-dragging under US sanctions. 

Adnoc, or Abu Dhabi National Oil Company, is the main contender to acquire the holding in Serbian Oil Industry (NIS), four people familiar with the proposed deal told the Financial Times. 

While Adnoc is favourite to buy NIS, operator of the Pančevo refinery and the Balkan country’s main crude importer, the Serbian company is continuing to talk to other potential bidders, including Hungarian national oil group MOL, two of the people said. 

While the deal value is unclear, NIS lists assets of $4.7bn in its latest 2024 filing, approximately $2.6bn of which corresponds to the Russian owners’ stake. 

The fate of NIS has hung in the balance since January when it was caught up in US sanctions targeting Russia. The US Treasury called on the Russian owners to sell their stake in NIS as part of its efforts to target Moscow’s oil revenues. 

NIS’s problems deepened when Washington did not extend the waivers that had allowed it to continue operating, forcing the company to halt oil production on Friday. 

NIS, which supplies the vast majority of Serbia’s oil products, is 56 per cent owned by two Gazprom subsidiaries, mainly Gazprom Neft, with the Belgrade government holding about 30 per cent and the rest with small shareholders. 

The sanctions have led to increased tensions between the owners of NIS, two people close to the company said, with Serbian officials becoming increasingly frustrated with the Russian co-owners for repeatedly delaying a sale that could resolve the issue. 

“They seemed reluctant to [negotiate] until the very end, even though there was no shortage of potential buyers and plenty of time to figure the deal out,” one of them said. 

This attitude had only changed in recent weeks, two people familiar with the discussions said. Yet sources close to the Serbian leadership questioned whether the Russian side was really willing to sell. 

In a December 3 statement, Gazprom Neft said NIS was operating “with the full support of the Serbian government” and described their co-operation as “constructive”. The statement made no mention of a possible sale. 

The involvement of Adnoc is down to the close relationship between the UAE and Serbia, rather than for strategic or business reasons, said another person familiar with the process. 

Adnoc has over the past year attempted some $40bn of international deals via its subsidiary XRG, which is seeking to build a global chemicals, gas and low-carbon business. 

But any move for NIS, if successful, would be via the main business rather than XRG, the person suggested. 

Serbia’s preference would be to buy the remainder of NIS itself, but their Russian co-owners are reluctant to sell to them, according to two people familiar with the matter. 

Belgrade is not keen to go down the path of nationalisation owing to fears of inflaming hostile public opinion. 

Serb President Aleksandar Vučić, an ally of the Kremlin, had set a mid-January deadline for Gazprom Neft to sell its stake or face having it put under state administration. 

But he also said in a speech last month that Serbia should “avoid nationalisation and confiscation of property at all costs” but offer a higher price for Russia’s stake should the potential deal with a foreign buyer not materialise. 

Serbia’s neighbours have faced similar issues since Washington imposed separate sanctions on Russian oil companies Lukoil and Rosneft in October. Lukoil owns vital oil refineries in Bulgaria and Romania, as well as other energy infrastructure in Serbia, Croatia, Montenegro and North Macedonia. 

Adnoc declined to comment on the deal. NIS and Gazprom Neft did not reply to a request for comment.