Fund managers bullish on Saudi petchem, banking stocks: survey

Fund managers mostly have a bullish outlook on Saudi Arabia’s Tadawul All Share Index (TASI), with banking, petrochemical, and insurance stocks the top picks, NCB Capital said in a report.

In the brokerage’s quarterly fund managers’ survey, 75 percent of respondents were positive on TASI, while the remaining 25 percent of respondents indicated a bearish outlook on TASI.

“Investors believe that the oil price outlook and the EM indices inclusion are the main factors that will drive the investor behavior over the next quarter,” NCB Capital said.

The vast majority of respondents found TASI to be fairly valued, with fund managers showing a bullish outlook on the banking, petrochemicals and insurance sectors.

Meanwhile, investors had a relatively neutral outlook for healthcare, telecom and consumers stocks, and were bearish on the industrial and construction sectors.

In terms of asset allocation trends, the majority of fund managers have less than 5 percent cash levels in their portfolios.

Meanwhile, around 25 percent of respondents have more than 10 percent cash levels in their portfolios.

Balanced and growth strategies were the strategies most expected to outperform, while a dividend-oriented strategy was the least popular, the report noted.

When asked about the Nomu index, the majority of fund managers do not have a clear view on the parallel market.

However, those that do believe that the market is undervalued, according to the survey results.

“The top three factors which fund managers believe will stimulate the Nomu market are: enhancing corporate governance and disclosure; improving the quality of listed companies; and   increasing market depth in terms of turnover,” NCB Capital concluded.

The NCB Capital Fund Managers’ Survey is a quarterly survey sent to local and international fund managers, aimed at collecting data regarding their views on the Saudi equity market.

The survey considers the outlook for both the TASI and Nomu markets, in addition to asset allocation trends.