skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Data from EPFR shows that interest in Saudi Arabian equities has really picked up in 2018, whilst the country's benchmark Tadawul All-Share Index has surged 7.5%. This has primarily been driven by three factors:

  • The expected inclusion of Saudi Arabian stocks into the FTSE Russell EM Index in March and then the larger MSCI EM Index in June.
  • Planned SOE privatisations, which includes the potential USD2tn IPO of Saudi Aramco. The Saudi government plans to increase the number of companies listed on its stock market by nearly 50%, from 170 to 250 companies over the next four years, with an 80-strong IPO pipeline.
  • The ambitious Saudi 2030 vision (first announced in 2016) that looks to open up the country's capital markets and reduce the country's oil dependence, which supports the longer-term investment case for the Kingdom. This was needed after a plunge in crude prices crippled the nation's finances.

Based on this, we recommend a LONG POSITION in the iShares Saudi ETF as history suggests that ahead of the June announcement from the MSCI and in the weeks after actual inclusion, the Saudi stock rally will continue, driven by inflows.

We also believe that Saudi stocks offer a longer-term bullish narrative and we suggest remaining LONG SAUDI STOCKS targeting a climb in the Tadawul All-Share Index to 8,497 area in the long-term.

The full report explores the recent flows into Saudi Arabian equities, looks at the previous impact of EM index inclusion on country stock markets and explores in detail the above bullish Saudi Arabian stock market trade ideas. To access this report please click on the attached PDF below;

Saudi_Arabia_EM_Status_Mar2018.pdf


Fundamentals: christopher.shiells@informagm.com and robert.graystone@informagm.com

Technicals: andrew.dowdell@informagm.com

Recommended Articles

  • IGM FX and Rates

    FX Viewpoint – Seasonality in December?

    By Tony Nyman 01 Dec 2020

    In our Q4 version of Oct 5, we concluded that 15-20 years ago, it was a good bet to short the DOLLAR. More recently, we have seen strength. We continued Q4 seasonality this year could come second to the potentially big drivers of COVID vaccine hopes, a resilient global economy, the Biden lead and Brexit, but BEARS might want to look at a LONG AUD/USD (but of course the RBA could well cut rates before the year is out). The last 20 years has seen an ave of +0.9% during Q4 and current standing is +2.5%. We added USD BULLS might consider a LONG USD/NOK. An ave win of +1.4% since 2000. A very short NOK market though has rocketed in this risk-on environment and the less said about the -5.0% USD/NOK losses the better! So far in the month's early exchanges, the USD is mostly slightly lower, from -0.03% AUD through to -0.3% CHF and EUR and -0.4% SEK. Only USD win so far is the tiny +0.1% YEN. How does the big DOLLAR tend to fare generally in the run-up to year-end? Further, are there any G10s that seem to perform particularly well/badly through Dec? For more read our FX Viewpoint Blog >

    Topics Industry News

  • IGM FX and Rates

    Viewpoint: RBI intervention here to stay but INR FX may do better in Q1 2021

    By Jonathan Cavenagh 30 Nov 2020

    - INR's underperformance in 2020 has been quite stark given the supportive balance of payments backdrop for the currency. The current account balance has shifted into surplus for the first time since 2004 and net FDI inflows have more than offset net portfolio outflows. INR FX is also cheap relative to our short term fair value model and has not caught up with the improved risk back drop reflected in higher equities. - This large divergence mainly reflects the RBI's continued aggressive FX intervention, which has seen FX reserves for the central bank rise sharply and offset the balance of payments surplus. - In this piece we outline the medium term drivers of RBI's FX intervention, which we feel are mainly geared around currency competitiveness. India inflation is generally higher than its trading partners, which means nominal FX appreciation needs to be contained to offset this trend, while India's share of global goods exports has stagnated in recent years. The country also has structural trade deficits with big manufacturing economy's like China. - We conclude that RBI FX intervention will remain a key feature of the INR FX landscape. - Still, there is a scope for the intervention pace to moderate from heady levels into 2021. Historically, stronger wholesale inflation pressures sees the pace of intervention slow as the authorities become more comfortable with some FX strength to offset imported inflation pressures. A continued recovery in global commodity prices suggests the risks for India's wholesale inflation outlook are skewed to the upside. - FX intervention also tends to come down when export and IP growth trends improve, which is also a risk as we move into early 2021. Coupled with the fact that Q1 tends to be the best quarter for INR FX from a seasonal stand point, suggests to us the market will use USD/INR spikes between now and year end as dollar selling opportunities. See the full note below for more details. Read on for more...

    Topics Industry News

  • IGM Credit, IGM FX and Rates

    China Insight: Deleveraging already starts to kick in, as per PBOC Q3 report

    30 Nov 2020

    PBOC Q3 monetary policy report released on 26 November reinforces our view that liquidity will be going tighter and deleveraging may be getting more prominent in the months ahead. The report, echoing the need to stabilize leverage, direct financing and control financial risk suggested by PBOC governor Yi Gang in a research paper published on 17 Nov, indicates second-phase deleveraging is kicking in, though it, in terms of magnitude, may be more gentle than the first-phase in 2017 (chart 1).

    Topics Industry News

;

Any questions? Speak to a specialist

Would you like to request sample data or analysis from Informa Financial Intelligence? 

See how our tailored solutions can help you gain a competitive advantage: