Executive Summary
GCC market performance remained muted in November 2024, as Dubai’s outperformance was overshadowed by the poor showing of Saudi markets. The global market optimism upon Trump’s return to White House did little to GCC stock markets. Looking ahead to 2025, economic diversification for the GCC countries remains a long shot, especially considering the need to expand the non-oil revenue base through higher tax collections, which could likely diminish the attractiveness of GCC as a tax haven for expats. Oil prices are in a structural drift, with supply and demand dynamics contradicting each other. Oil prices could be in a goldilocks situation during 2025, hovering within a range of $ 70-80/bbl. The disconnect between oil prices and fiscal break-even oil price, and the role of U.S. as a swing producer of oil could result in the GCC sovereign debt market being more active in 2025 from an issuance perspective. Trump 02 will be an interest development to watch out for in 2025, especially with the incoming U.S. President inheriting a volatile geopolitical landscape. The outlook for GCC markets in 2025 hinges on how they fare with respect to key pillars such as economic growth, valuation, earnings growth and liquidity. In the long run, earnings growth needs to hold up to justify valuations and attract greater foreign investor participation.
