27 Apr 2016
Saudi Arabia 2030 vision: Execution will be key – Goldman Sachs
Research Team at Goldman Sachs, notes that on Monday, April 25, the Saudi cabinet approved a set of measures under its Vision 2030 which targets economic diversification and reducing reliance on oil.
Key Quotes
“A National Transformation Plan, expected to be announced in the coming weeks, will detail the steps for the next 5 years.
What does Vision 2030 entail?
Key measures announced as part of Vision 2030 include:
• Initial public offering of less than 5% of the state-owned oil conglomerate, Aramco, which the Deputy Crown Price believes is worth more than US$2 trillion.
• Creating a US$2 trillion sovereign wealth fund, partially funded by proceeds from the Aramco IPO, that will be invested in non-oil sectors.
• A new residency system allowing expatriates (subject to certain conditions) to work in the country on a long-term basis.
• Increasing the contribution of mining, military production, healthcare, and tourism sectors.
Implications
The market reacted positively to the news, with the Tadawul Index up 2.5% after the announcement, mainly driven by stocks in the real estate (optimism regarding real estate reforms) and banking space (optimism regarding financing of potential real estate/infrastructure projects).
However, we remain cautious as the execution on these proposed measures may be a long drawn out process and await further details on the plan.”
Key Quotes
“A National Transformation Plan, expected to be announced in the coming weeks, will detail the steps for the next 5 years.
What does Vision 2030 entail?
Key measures announced as part of Vision 2030 include:
• Initial public offering of less than 5% of the state-owned oil conglomerate, Aramco, which the Deputy Crown Price believes is worth more than US$2 trillion.
• Creating a US$2 trillion sovereign wealth fund, partially funded by proceeds from the Aramco IPO, that will be invested in non-oil sectors.
• A new residency system allowing expatriates (subject to certain conditions) to work in the country on a long-term basis.
• Increasing the contribution of mining, military production, healthcare, and tourism sectors.
Implications
The market reacted positively to the news, with the Tadawul Index up 2.5% after the announcement, mainly driven by stocks in the real estate (optimism regarding real estate reforms) and banking space (optimism regarding financing of potential real estate/infrastructure projects).
However, we remain cautious as the execution on these proposed measures may be a long drawn out process and await further details on the plan.”