EFG Hermes upgrades Saudi Arabia ahead of anticipated EM index inclusion - The National

EFG Hermes upgrades Saudi Arabia ahead of anticipated EM index inclusion - The National:

"EFG Hermes has revised its outlook for Saudi Arabia upwards to overweight status, ahead of the country’s anticipated inclusion in the MSCI and FTSE emerging market indexes, which will generate flows of up to $45 billion into local equities, according to the investment bank's projections. EFG Hermes expects the total return from Saudi stocks to be around 30 per cent by mid-2019 on the back of foreign inflows, boosted by increasing earnings per share and dividend growth, it said in a strategy note issued on Monday. “We expect the [emerging market] upgrades to drive [approximately] $30 to 45bn total foreign inflows (of which $14bn would be passive) into Saudi Arabia,” the bank said in a note. “Our market call is supported by an expansionary budget in 2018, which our economics team expects will lead to a gradual pick-up in economic growth from 2Q18.”"



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