SICO cuts outlook to ‘sell’ on Saudi Kayan, Yansab, Sipchem

Bahrain-based SICO Bank revised its recommendation on large cap petrochemical firms Saudi Kayan and Yanbu National Petrochemical Co. (Yansab) from “buy” to “sell.”

Recommendation on mid-cap Saudi International Petrochemical Co. (Sipchem) was also lowered from “buy” to “sell.”

The bank maintained its outlook on National Petrochemical Co. (Petrochem) at “sell.”

“(The) positive sentiment around MSCI index inclusion has provided near-term tail winds to Saudi equities, taking the Tadawul index 10.4 percent higher year-to-date,” SICO said in a recent sector report.

The investment bank said the petrochemicals sector could continue to rally in anticipation of MSCI upgrade, but there no long-term factors to support the bullish sentiments.

Following the MSCI decision, the Saudi Stock Market (Tadawul) could correct downwards as fundamentals come to the forefront, SICO said.