Saudi Arabia's stock market, the Arab worlds’ largest, is attractive thanks to its current cheap valuation compared to other emerging markets equities as well as the government’s economic reforms and possible inclusion in two-widely tracked indices, according to Bank of America Merrill Lynch.
The kingdom's equities are trading at a 3 per cent premium to global emerging markets (Gems), compared with a historical premium of more than 30 per cent, the bank said in a new report. The Tadawul market is also trading at an 11 per cent discount to its longer term average.
The kingdom's stock exchange, is benefiting from government reforms that will help lift non-oil growth and higher oil prices that will buoy the economy overall, the report said.
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Arabian Gulf stocks rebound, buoyed by global markets
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Saudi Arabia, the Arab world's largest economy, is undertaking various reforms to diversify its economy, lower its dependence on oil, narrow its fiscal deficit and propel growth. The kingdom announced the biggest budget ever for this year, with a 200 billion riyal stimulus programme, and the granting of bonuses to public sector citizens. These measures will help return the country to growth in 2018 after contracting 0.5 per cent last year because of fiscal consolidation and lower crude output due to the kingdom’s adherence to a global oil deal.
“The Saudi market has underperformed Gem peers by [around] 4 per cent YTD [year-to-date] and 42 per cent since the beginning of January 2017,” said the report. “This comes despite improving earnings expectations (the earnings revision ratio has been consistently above 1 since July, indicating more upgrades than downgrades), rising dividend yields (driven by higher pay outs), a more healthy oil back drop and the recently announced expansionary budget."
Also, Saudi Arabia is expected to be included in the MSCI Emerging Markets Index, which could attract $30 billion of inflows, and FTSE EM Index, the report said.
Bank of America Merrill Lynch is bullish on bank and petrochemical stocks, with its top picks lenders Al Rajhi and Samba, and Yansab and Sabic for petchems.
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MEFCC information
Tickets range from Dh110 for an advance single-day pass to Dh300 for a weekend pass at the door. VIP tickets have sold out. Visit www.mefcc.com to purchase tickets in advance.
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
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The specs
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Price: From Dh359,900 ($98,000)
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Business Insights
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Killing of Qassem Suleimani
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Killing of Qassem Suleimani
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