Mideast fund managers remain bullish on Saudi equities: survey

Fund managers in the Middle East are bullish on Saudi Arabian equities, as the Kingdom takes steps that will help it attain emerging market (EM) status, data from a monthly Reuters survey showed Monday.

International index compiler MSCI in June will study the possibility of including the Saudi Stock Exchange (Tadawul) in its EM index.

Saudi Arabia, however, will probably have to wait until 2019 for inclusion to take effect, under MSCI’s timetable.

FTSE will also decide whether to upgrade Saudi Arabia to the status of a secondary emerging market in September.

"We believe that Saudi Arabia will account for 2.5 to 3 percent of emerging market indices," said Sachin Mohindra, portfolio manager at Abu Dhabi's Invest AD.

Saudi Arabia remains the most popular market in regional equity portfolios. The Reuters survey showed that 54 percent of fund managers expect to raise their allocations to Saudi equities over the next three months, while only 8 percent are likely to reduce them (roughly the same as last month's poll).

Elsewhere in the Gulf, the United Arab Emirates has lost some of its shine, as first-quarter earnings announced by companies were not enough to pull the markets out of consolidation, managers said.

About 38 percent of funds expect to boost their equity allocations in the United Arab Emirates and 31 percent plan to cut them. In the previous survey, the balance was 38 percent to 8 percent.