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Fund managers are becoming bullish on the Saudi Arabia's equities with a marked preferences for stocks in Tourism, Healthcare and Insurance sectors, a survey by Riyadh-based investment bank and asset manager SNB Capital showed.
On the other hand, fund managers were mostly bearish on Petrochemicals and Consumers sectors. Petrochemical prices have fall across most product segments due to China's stalled recovery coinciding with an abundant supply.
The majority of the managers believe the market is fairly valued, and they mostly consider the economy is going through a recovery phase.
SNB Capital said the fund managers surveyed believed oil prices will be the main market driver, followed by interest rates and inflation. They expect oil prices to trade between $70-$79.9. They don’t expect any additional interest rate hikes in 2023f.
Fund managers maintained their preference for value as the best investment strategy, followed by growth and mid-cap.
The majority of the managers expect the Saudi GDP to grow at its expected level of 3.1% in 2023f.
On Thursday, the General Authority for Statistics said the kingdom's economy grew by 3.8% year on year in the first quarter of 2023, broadly in line with estimates released last month. On Wednesday, the International Monetary Fund (IMF) said it expects growth in Saudi Arabia to slow to 2.1% in 2023, lower than its May forecast, on the back of OPEC+ production cuts announced in April.
In the survey, the managers believe the Healthcare and Pharma sectors are the most attractive sectors in terms of IPOs, followed by Tourism.
Regarding asset allocation trends, most fund managers shifted towards keeping higher levels of liquidity in their portfolios, compared to lower levels in the investment bank's survey.
(Reporting by Brinda Darasha; editing by Seban Scaria)
