KSA Business: KSA equity market to outperform global peers: Al Rajhi – Gulf Digital News

KSA Business: KSA equity market to outperform global peers: Al Rajhi – Gulf Digital News

Facing the double whammy of rising interest rates and inflation, the Saudi Arabian bourse is better placed to outperform the global equity markets, according to Al Rajhi Capital Research.

This is because the structure of the Saudi equity markets, dominated by banks and energy, position it well enough to tackle the twin threats.

The results of Al Rajhi’s fund manager survey (51 responses), conducted from April 12 to 18, confirm this view.

Banks to perform well

Regarding sectors, most participants voted banks to outperform followed by petrochemicals, software and services and healthcare. This indicates that the buy side’s view is driven by the current macro developments, which is dominated by headlines over the US Fed rising interest rates and inflationary environment across the world.

Saudi banks, that have high exposure to CASA (Current Account and Savings Account), would notably benefit from higher interest rates supported by better NIMS (Net Interest Margin Securities). On the other hand, both petrochemicals and healthcare are considered to provide a decent hedge against inflation.

The software and services could continue to benefit from the digitisation trend in KSA, however, we are cautious about the rise in wages in the IT sector.

Insurance, food and beverages to underperform

In terms of underperformers, the buy