MENA fund managers to raise Saudi investments, maintain other holdings: Reuters poll

DUBAI (Reuters) - Middle Eastern fund managers plan to increase investments in Saudi Arabia, while keeping exposure in the rest of the region at current levels, according to a Reuters poll.

FILE PHOTO: Reflection of stock market is seen on a screen as a trader monitors at Bahrain Bourse in Manama, Bahrain, September 16, 2019. REUTERS/ Hamad I Mohammed

Saudi Arabia's share index .TASI is up almost 1% this year. It gained 7% in 2019 last year but lagged other Gulf markets including Kuwait and Dubai as investors sold off ahead of Saudi Aramco's record initial public offering (IPO).

Aramco raised as much as $29.4 billion, propelling the Riyadh bourse into the world’s top ten by value of listed companies.

Five of nine managers polled said they would increase their investments in Saudi Arabia, anticipating favorable policy reforms and market opportunities.

“In 2020, we see an acceleration of gains in Saudi stocks benefiting from social reforms and greater spend on projects and homebuilding,” said Akber Khan, head of asset management at Al Rayan Investment in Doha.

“A potential relaxation of the foreign ownership limit... could be another profitable theme in 2020,” said Richard Lee, senior portfolio manager at Emirates NBD.

Last year, Saudi Arabia relaxed a 49% limit for foreign strategic investors in shares of listed companies.

The record-breaking Saudi Aramco offering may also encourage other IPOs.

“Other entities may follow suit,” said Lee, mentioning healthcare provider Sulaiman Al Habib.

Last year the family-owned company’s IPO application was approved by Saudi Arabia’s market regulator and it plans to list 15% of its capital.

Saudi Arabia saw inflows in 2019 from its inclusion in the MSCI and FTSE Russell emerging market indices, but Lee said that theme was “behind us.”

Most of the fund managers polled said they were keeping their allocations in Egypt, the United Arab Emirates, Qatar, Turkey, and Kuwait the same.

editing by John Stonestreet