Shares in Saudi Arabia will offer the “value story” across emerging markets next year as stable oil prices and government spending are set to lure investors to the Arab world’s largest stock market, according to VTB Group.
“We expect the first half to be bullish for Middle East and North Africa equities and see Saudi Arabia as the value story for 2013 across the emerging market space,” analysts Digvijay Singh and Alexey Zabotkin at VTB Capital Plc, the London-based investment-banking arm of VTB, wrote in a research note today, with an overweight recommendation on the kingdom. Oil prices, infrastructure spending and dividend yields are among catalysts that will help boost share prices, they said.
Saudi Arabia, the world’s biggest oil exporter, is embarking on about $500 billion in government spending and projects including the world’s tallest tower in Jeddah. The Saudi benchmark Tadawul All Share Index (SASEIDX) gained 7 percent this year, lagging the 15 percent gain for the MSCI Emerging Markets Index. (MXEF) The Saudi index offers a dividend yield of 3.6 percent compared with 2.7 percent for MSCI EM Index.
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