[VISION] | PEOPLE: There are no people visible in the image. | TEXT: - The oil price at which reforms now bring imbalances to low mid-single digit levels moves to US$60/bbl, from US$50/bbl before. - Earnings momentum, index events make us positive Saudi stocks. Prefer banks, petchems. Top picks: Rajhi, Samba, Yansab, Sabic - FULL REPORT - Macro: sweet spot for now Economic activity has bottomed out as high oil prices are allowing implementation of looser fiscal policy and containing near-term fiscal deterioration. The government intends to support activity through a) a more gradual pace of fiscal reforms; b) introduction of Household/Cost of Living Allowances and Private Sector Support programs; c) introduction of structural reforms; and, d) the launch of mega-projects. The latter provides most upside potential to our average growth projections of 2.2-2.5%yoy. - Fiscal reforms now need US$60/bbl to safeguard stability The oil price threshold at which the macroeconomic adjustment brings imbalances to low mid-single digit levels moves to cUS$60/bbl, from our previous assessment of cUS$50/bbl. The revised Fiscal Balance program exposes the budget to volatility in oil prices. Still, there are four ways in which authorities can improve on fiscal dynamics: 1) front-loaded energy pricing reform; 2) privatizations; 3) proceeds from anti-corruption crackdown; and, 4) phasing out of the Royal Order next year. - Equity strategy: remain positive, outlook gains momentum We retain our positive view on the Saudi market as we see strong earnings momentum as well as increasing appetite for Saudi equities amongst global investors. Our views are based on: (1) attractive valuation, with the Saudi market now trading at a mere 3% premium to GEMs versus a historic premium of more than 30%; (2) improving macro fundamentals; (3) the prospect for accelerating earnings, FCF and dividend growth on the back of reform programs, an expansionary budget and a more pedestrian pace of austerity imple