41% of investment fund managers upbeat about Saudi market: SNB Capital

Investment fund managers gave expectations for the performance of the Saudi market during the first quarter of 2024. As much as 41% forecast a rise, 48% were neutral, while 11% projected a decline below the historical average, SNB Capital said in a recent report. 

In its latest survey, the brokerage found that investment fund managers still believe that oil prices, interest rates, and inflation will be the key market drivers. 

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Oil prices are seen to range between $80-$89.9 per barrel in 2024. Further, OPEC+ is expected to maintain oil supply unchanged during the coming meeting, according to the fund managers expectations. 

Concerning interest rates, 80% of the survey participants anticipated at least one rate cut in 2024, while 15% others predicted no change. 

The brokerage noted that most fund managers still believe the market is fairly evaluated.

However, 33% of them see the market as overvalued, up from 15% in Q4 2023. 

SNB Capital explained that fund managers maintained their preference for the tourism and health care sectors, while having a growing interest in the insurance sector. They, on the other hand, have different views towards the petrochemical sector, with 22% expecting the sector to perform well in 2024, while 46% others anticipated the sector's performance to be less than expected. 

Meanwhile, fund managers still seek to take part in public offerings, as 58% prefer to participate in the IPOs of the healthcare and medicine sector, while 19% favor the IPOs of the tourism sector. 

The percentage of fund managers who keep a cash liquidity above 20% of the assets remained unchanged at about 12%, while about 41% maintained a liquidity rate less than 5% of the assets. 

SNB Capital further explained that the growth strategy continued to be the favorite of the fund managers, with the percentage of those preferring value strategies falling significantly from 42% in Q4 2023 to 26% in Q1 2024. The strategies of medium capital companies have become more preferred by 33% of managers in Q1 2024, compared to 19% in Q4 2023. 

Additionally, the survey pointed out that the majority of fund managers expected the Saudi GDP to grow by 4.4% in 2024.  

Concerning market profitability, 63% of survey participants predicted market profits to grow less than 10% on an annual basis in 2024, while 26% expected earnings to remain stable on an annual basis.