TASI likely to stabilize in 8,400-9,000 point range in 2021: NCB Capital

Tadawul trading screen

Saudi Arabia’s benchmark Tadawul All Share Index (TASI) is projected to stabilize between 8,400 and 9,000 points in 2021, based on expected profitability growth and the market’s fair price-earnings (P/E) ratio, NCB Capital said in a report.

The stock market’s profits are likely to record 41% growth this year, compared to an estimated drop of 37% in 2020, the brokerage added.

The stability of the main index (TASI) this year will reflect cash returns of 2.9-3%, the report said, adding that the solid growth in profits will be in line with the market’s current high valuation.

Moreover, improved economic activity and accelerating pace of work in major projects despite COVID-19 is likely to support profit growth this year.

The brokerage expected cement, utilities and construction to be among the top performing sectors. Despite the neutral view towards the healthcare and banks sectors, it preferred certain selected stocks in those sectors.

Meanwhile, NCB Capital predicted strong volatility in the tourism and petrochemicals sectors, adding this may create short-term opportunities, while the retail sector may face some challenges this year.

The brokerage’s top picks are Saudi Electricity Co. (SEC), United Electronics Co. (eXtra), Mouwasat Medical Services Co., Yanbu Cement Co., and Bank Albilad.

NCB Capital expected the Saudi economy to rebound by 3.2% in 2021, compared to a decline of 3.7% last year.

The commitment to Vision 2030 and the Public Investment Fund’s (PIF) SAR 150 billion worth of investments will remain a key driver for the economy, as well as stability in oil prices following the OPEC+ agreement, the brokerage noted.