SICO picks 7 Saudi firms for top GCC stocks

Jarir, MEPCO, Mouwasat, Saudi Kayan, STC and Yansab were among Bahrain-based investment bank SICO’s top picks for GCC stocks.

The bank did not recommend a “buy” rating for the shares of these seven Saudi firms, but it expects that the stocks would outperform their peers. SICO has advised its customers to consider increasing their positions.

On a macroeconomic level, market players will benefit from the shutdown of small stores due to the impact of the value-added tax (VAT) and the higher Saudization rates, SICO said.

Heavyweight companies will see stronger cash flows and dividends, driven by possible inclusion of Tadawul to the MSCI Emerging Market Index and FTSE Russell Index, it added.

The foreign workers’ income is expected to come under pressure following the levy of VAT, dependents’ fees and higher fuel prices. However, some of the impact on the market would be offset by benefits from the citizen’s account program and the cost of living allowance recently granted to citizens.