Saudi stock market to offer ‘strong relative value’ in 2013



JEDDAH: KHALIL HANWARE | ARAB NEWS STAFF

Published — Friday 28 December 2012

Last update 27 December 2012 11:29 pm

| نسخة PDF Print News | A A

Shares in Saudi Arabia will offer the “value story” across emerging markets next year as stable oil prices and government spending are set to attract more investors to the stock market, according to analysts.
"I think the Saudi market should offer strong relative value because of the attractive fundamentals in an uncertain world," Jarmo T. Kotilaine, a regional analyst, told Arab News yesterday.
Basil Al-Ghalayini, CEO of BMG Financial Group, said: The fundamentals are quite promising for 2013 with the continuation of the unprecedented government spending on certain mega projects. Furthermore, we are expecting more IPOs to be released in 2013 compared with 2012 which should provide the stock market further depth and breadth."
The Saudi benchmark Tadawul All Share Index gained 7 percent so far this year, lagging the 15 percent gain for the MSCI Emerging Markets Index (MXEF), a Bloomberg report said.
It said the Saudi index offers a dividend yield of 3.6 percent compared with 2.7 percent for MSCI EM Index.
“We expect the first half to be bullish for Middle East and North Africa equities and see Saudi Arabia as the value story for 2013 across the emerging market space,” analysts Digvijay Singh and Alexey Zabotkin at VTB Capital Plc, the London-based investment-banking arm of VTB, wrote in a research note, with an overweight recommendation on the Kingdom.
Oil prices, infrastructure spending and dividend yields are among catalysts that will help boost share prices, they said.
Advanced Petrochemicals Co. (APPC), National Industrialization Co. (NIC) and Alinma Bank are among VTB Capital’s top five stock picks in the Middle East and North Africa.
Kotilaine pointed out that the global backdrop will be key in determining the relative attractiveness of the Saudi market.
He said: "A failure to work out a meaningful short-term solution to the US fiscal saga and the euro zone crisis would likely revive oil demand erosion concerns, however temporarily. This might hit both oil production and the relative competitiveness of the petrochemicals sector. However, the government is well positioned to counteract such negative forces to ensure relative continuity.
"But there is some chance even of upside risks: A US compromise and EU muddling through with progress on completing the monetary union. This would likely give us stronger oil prices and increased competitiveness of petrochemicals, even if the positive progress in KSA would stand out less from a favorable global dynamic," said Kotilaine.
Despite falling for two consecutive months and offering lucrative opportunities with attractive valuations, the Tadawul index slid for a third month in November. Tadawul declined by 3.8 percent and almost erased all of this year’s gains by ending November at a gain of 1.8 percent, the National Commercial Bank (NCB) said in its latest report.
The worst performing sectors during November were real estate which dropped 8.6 percent followed by construction, declining by 7 percent M/M and intensifying its YTD losses to 17.7 percent by the end of last month. All sectors reported declines with the exception of transport which managed to gain a marginal 0.1 percent over the month.
The quickest sectors to overcome losses in December were insurance, media & publishing, and telecom which have gained 12.2 percent, 5.7 percent, and 5.5 percent MTD, respectively, the NCB report said.
Activity levels continue to deteriorate as November recorded an average of SR 4.9 billion daily traded volumes following October’s SR 5.0 billion. Since the beginning of the year, daily volumes have averaged at SR 7.8 billion, matching 2008’s level.
Furthermore, market capitalization declined during November to SR 1.34 trillion from the previous month which was at SR 1.38 billion, the report said.

What's happening around Saudi Arabia

ABHA: Gov. Faisal bin Khalid bin Abdulaziz, Asir region, ordered the formation of a working team in Bisha to address the status of the battered woman who recently shared her suffering on social networking sites.Mohammed bin Sabrah will head the team,...
MADINAH: Madinah Gov. Prince Faisal bin Salman launched a series of charity and developmental projects during his recent visit to Khaibar Province at costs exceeding SR100 million.They included municipal projects at Khaibar, Al-Salsah and Al-Ashash M...
MADINAH: Pilgrims spend the most beautiful moments in the Prophet’s Mosque, where they pray in Riyazul Jannah (garden from the gardens of paradise) and get to greet the Prophet, peace be upon him, said the Omani pilgrim, Ahmed Nasser. “Such deeds giv...
MADINAH: A member of the Senior Scholars Council, Dr. Abdullah Al-Manieh, has called for the establishment of women’s departments at the Islamic University in Madinah in line with other universities in the Kingdom.“The Muslim woman has had her own st...
JEDDAH: The euphoria over the sudden resumption of call facility on WhatsApp in the Kingdom on Saturday was short-lived as the service was not widely available the following day. A large number of users of the popular messaging service, barring a few...
JEDDAH: Work on developing and modernizing the Kingdom’s 27 airports is ongoing and is expected to be completed within the next five years, according to Sulaiman Al-Hamdan, president of the General Authority for Civil Aviation (GACA).“Our goal is tha...
RIYADH: Saudi Arabia and South Korea are set to widen cooperation in the health care sector following a joint road show which underlined potential areas of cooperation and showcased world-class health facilities of that country. The event, titled “Ko...
RIYADH: The Saudi Green Building Forum (SBGF) believe that about fifty percent of the ongoing eco-friendly green building projects across the Kingdom are facing delays for not fulfilling criteria.Faisal Alfadl, secretary-general of the forum, on Satu...
AL-UQAIR: The low-quality of education in the Kingdom arises from many factors. Included among these are the complexity of the system itself, unclear educational vision, non-professional education development programs, and instability due to changing...
JEDDAH: Security authorities in Jeddah called a citizen and his wife for interrogating with them on the charges of beating their Eritrean housemaid.Makkah Police media spokesman, Col. Dr. Atti bin Attiah Al-Quraishi, said: “The Safety Center of Jedda...
AL-UQAIR: The Saudi Commission for Tourism and National Heritage (SCTNH) has deposited SR600 million with local banks for the Al-Uqair Development Company in Al-Ahsa, SCTNH President Prince Sultan bin Salman has said.“Saudi citizens have some equitie...
JEDDAH: A number of preachers have been arrested for using sermons to promote political ideologies, said Fahad Sulaiman Al-Khalifa of the Ministry of Islamic Affairs.He said the issue was not widespread, and the ministry reiterated that the sermon sh...
JEDDAH: A Saudi military analyst and retired brigadier, Ibrahim Al-Marie, has called for the compulsory drafting of young Saudis into the military.This is, he said, not only because the Kingdom is facing regional threats, but because of its benefits...
RIYADH: Advertisement campaigns for fake TOFEL and ILET certificates are being monitored on social media websites in an effort to halt this illegal practice. The certificates originate from Jordan and can be obtained by clients for a sum of SR2,000,...
JEDDAH: A group of young men has come up with a novel home cinema project.The project involves providing a cinema hall show for lovers of the entertainment medium by providing projector screens, sound systems and lighting devices with suitable and co...

Stay Connected

Facebook