Strategy Note /
Saudi Arabia

SNB Capital Fund Managers’ Survery

  • The fund managers split their market outlooks in Q3 22 between bullish, neutral and bearish

  • Around 50% of the managers indicated that the market is fairly valued in Q3 22

  • Participants believe that value strategies will outperform in the coming period

Walid Khalid Bamhair
Walid Khalid Bamhair

Follow
SNB Capital
21 September 2022
Published bySNB Capital

The SNB Capital Fund Managers’ Survey is a quarterly report that summarizes the results of a survey sent to local, regional and international fund managers. The survey aims to collect data regarding institutional investors’ views on the Saudi economy and the equity market, and compares it with the results of the previous surveys. It also considers the outlook of various sectors in the market, the anticipated coming catalysts and cash levels. This anonymous survey was sent to one designated fund manager at each participating institution.

  • TASI outlook and valuation: The fund managers split their market outlooks in Q3 22 between bullish, neutral and bearish, unlike in Q2 22 when 17% of the managers were bearish and 45% were bullish. Investors maintained their belief that oil price movement will be the main market driver with an average oil price of US$80-US$89.9, followed by interest rates and inflation, in-line with the previous surveys. Moreover, 35% of the managers expect daily volumes to decrease from the H1 22 levels of SAR8.4bn in the coming period.

  • Outlook on TASI sectors: Around 50% of the managers indicated that the market is fairly valued in Q3 22, while 39% of respondents believed it is overvalued. In comparison, 52% believed that the market is overvalued and 38% said its fairly valued in Q2 22. Fund managers are bullish on the Banking, Construction, Healthcare and Industrials sectors while they are mostly bearish on consumers.

  • Asset allocation trends: Around 35% of fund managers kept their cash levels during the quarter at less than 5%, an increase from last quarter’s level of 24%. Fund managers with cash levels of more than 30% increased from 8% in Q2 22 to 14% in Q3 22. Participants believe that value strategies will outperform in the coming period while momentum and growth are the least preferred strategies.

  • Economy and GDP expectations in 2023f: Around 43% of fund managers believe that the economy reached a peak, while 35% believe that the economy is in a recovery phase. Regarding Saudi economic growth, 48% of the participants expect the economy to grow by 3.5% in 2023f.