44% of fund managers ‘neutral’ on Saudi market: SNB Capital

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The outlook of 44% of investment fund managers for the Saudi market performance in the fourth quarter of 2024 was mainly neutral, SNB Capital said in a recent report.

In its latest survey, the brokerage explained that bearish views increased from 9% in Q2 2024 to 16% in Q4 2024, while bullish views declined to 41% from 47% in Q2 2024.

Although the majority of the managers maintained their belief that the market is fairly valued, views of an undervalued market increased from 20% in Q2 2024 to 31% in the fourth quarter of the year.

The brokerage added that more than 85% of the managers expect at least two rate cuts in 2025 (most expectations indicated three cuts), while they mainly expect oil prices to range between $70 and $79.9, in-line with the current levels.

On sector picks, SNB Capital highlighted that the banking sector returned to be one of the managers’ top sectors as 72% are bullish on it, compared to 56% in Q2 2024, and 50% expect it to be the best-performing sector in 2025. Nearly 56% of the managers indicated that the sector’s latest results exceeded their expectations.

Meanwhile, preference for the tourism sector remained high (88% of the managers are bullish) while the construction sector became a new favorite with 63% bullish views. On the other hand, the managers remained mainly bearish towards the petrochemicals and energy sectors.

The managers also maintained their preference for healthcare & pharma as a top-pick sectors for IPO participation while services became a new favorite for IPOs.

“Going forward, 48% of the managers plan to increase their Saudi equity exposure, while 44% expect their exposure to remain broadly unchanged. Moreover, growth remained the managers’ top preferred investment strategy, preference for value strategies decreased, while momentum and dividend strategies became new favorites,” SNB Capital added.

On the Nomu-Parallel Market, the brokerage said the managers’ outlook mainly suggests it is an attractive market but liquidity is an issue. However, 41% of the managers indicated that their interest towards the market has evolved while 34% indicated it remains high.

Going forward, 50% of the managers plan to increase their Nomu market exposure, while 50% expect their exposure to remain broadly unchanged. The majority also believe that software and services are the most attractive sectors in the market.