FALCOM Financial says banks, insurance, telecom, FMCG, cement to be top performing sectors in 2021

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FALCOM Financial Services, in a recent report, said that banks, insurance, telecom, consumer staples, and cement will be the top performing sectors in 2021.

It cited the following reasons for these sectors to be sound investment bets:

Banks: FALCOM expects Saudi Arabia’s economic activity to pick up in 2021, which would support the banking sector and improve loan growth. It also predicts higher deposit levels and a gradual opening up of the economy to drive growth in 2021. FALCOM's top pick in the banking sector is Al Rajhi Bank.

Insurance and Reinsurance: According to FALCOM, the government’s decision to cover COVID-19-related healthcare costs for residents would whittle down claims, which would result in higher profits for insurance providers. It picked The Company for Cooperative Insurance (Tawuniya) and Bupa Arabia for Cooperative Insurance Co. (Bupa Arabia) in the insurance sector, and Saudi Re for Cooperative Reinsurance Co. (Saudi Re) for the reinsurance sector.

Telecom: The brokerage forecasts the telecom sector to grow strongly over the upcoming years, as growth in data consumption appears inevitable in a post COVID-19 world. It noted that Saudi Telecom Co. (stc) stood out and remained its top pick due to its status as a market leader and a first mover towards 5G networks.

Consumer Staples: According to FALCOM, the consumer staples sector remained largely unaffected by COVID-19, with the pandemic ringing in a change in consumer preferences, making them move to pantry loading, cooking and dining in-house during the lockdown. It expects relaxation of restrictions and the opening up of restaurants to be key tailwinds in the upcoming quarters for this sector. Almarai stock remains its top pick in this sector.

Cement: FALCOM expects the cement sector to continue reporting stable growth in cement sales, following re-opening of the economy and pick-up in economic activity. Its top pick in the sector is Southern Province Cement Co. (SPCC).