Saudi Arabia’s bourse could extend gains on Monday, as most of the region stays quiet with few themes to excite Gulf investors.
The Kingdom’s benchmark rose for the 13th time in 15 sessions on Sunday to reach a new six-year peak, continuing to rise on the back of its plan to open to direct foreign investment early next year.
“Saudi Arabia will be the pick for the rest of 2014 – opening up to foreigners gives us more access and also the potential for upgrades to emerging market status,” said Marwan Shurrab, fund manager and head of trading at Vision Investments.
“It’s a big step for the whole region.”
Other fund managers share that view. Rohit Chawdhry, Gulf Baader Capital Markets head of asset management in Muscat, cited the cement sector as one of his preferred picks in Saudi Arabia.
The sector slumped late last year because of a government crackdown on illegal labour, which led to a slowdown in construction projects.
The cement benchmark has since recovered to be up 17.9 per cent in 2014, versus the main measure’s 25 per cent gain. It remains reasonably priced at around 15-16 times earnings and offers a high dividend yield, said Chawdhry.
He also highlighted Saudi’s banking sector, which has low credit penetration relative to other emerging markets.
“Saudi hasn’t seen any kind of vociferous credit growth for consumers and the main reason was the absence of a mortgage law until recently,” added Chawdhry.
Elsewhere, Qatar’s index fell 0.7 per cent on Sunday in a broad sell-off as a recent surge faltered. A slowdown in United Arab Emirates markets had been benefitting Qatar, with Doha investors buying local stocks in the belief that it should catch up with UAE gains, especially those of Dubai.
Dubai is the top performing Gulf market in 2014, up 42 per cent, while Qatar has gained 29 per cent.
International markets offer Gulf investors little cheer – Asian stocks are near-flat as worries about the Ukranian conflict deter buyers, while oil is down nearly one per cent as Libya increased its oil output and worries over supply from key producer Iraq eased.