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Equity fund managers are cautiously optimistic about the Saudi markets, according to a new report by Al Rajhi Capital.
However, only 22% of those surveyed believe that a further rally exceeding 10% is likely.
"This is in contrast to our first survey, when over 90% were optimistic that the Saudi markets will beat the other GCC markets," the brokerage said in the report.
In terms of sentiment, the fund managers are divided with 48% believing further gains of 5-10%, while 30% believe the markets to be in a consolidation phase with gains ranging from 0 to 5%.
Moreover, the cautious sentiment was also reflected in the preference for investment style that is a combination of both growth and value (over 60% votes), while only 16% voted for growth style.
Similarly, in terms of market capitalisation, the majority (57%) of those surveyed preferred large cap stocks.
In terms of sectors, most participants preferred banks, followed by petrochemicals, and software & services and healthcare in the third position.
"This could be due to the decent Q2 2022 results, significant easing of liquidity situation in the system and optimism that the banks are well positioned to benefit from the Fed rate hikes," Al Rajhi Capital said.
(Writing by Brinda Darasha; editing by Seban Scaria)
