Appetite for Saudi equities is high among global investors looking at where to allocate capital over the coming 12 months, according to a live poll of nearly 400 investors and corporates attending the opening session yesterday of the EFG Hermes One on One Conference in Dubai.

The live investor poll is the largest event of its kind in global emerging and frontier markets and has been running for years now. Attendees had 10 seconds to respond to each of 10 questions.

Among the key takeaways:

Some 44% of respondents think Saudi equities will deliver the best USD-denominated performance this year, while 25% think Egypt will. Dubai brought up third place with 12%. Abu Dhabi, Kuwait, and Qatar brought up the rear with single digit percentages each.

Fully 63% of respondents see small- and midcap stocks in Saudi Arabia continuing to outperform large caps. That’s on-trend: Large caps have posted a five-year return of 51% against 89% for small- and midcap equities.

Investors have as much appetite for Saudi equities as they do for the “Magnificent Seven” tech stocks. A third of all respondents said they would buy and hold Saudi equities for one year — that’s just one percentage point less than the 34% that would buy and hold a basket of Apple, Alphabet, Microsoft, Amazon, Meta, Nvidia, and Tesla shares.

Most (44%) think the US’ S&P 500 will outperform the MSCI EM index in USD terms, in a reversal of last year’s forecast.

A large portion of respondents (44%) see the US Federal Reserve cutting rates by 50 bps— over two separate 25 bps cuts — during the year. 26% think it could cut interest rates by up to 75 bps in three separate moves.

47% believe oil prices will average around USD 80 / bbl this year, which is in line with what most pundits — including Fitch Ratings and the US Energy Information Administration (IEA) — have forecast.

Most respondents (62%) said they plan to invest more in their businesses this year than they did last year, while 19% plan to maintain the same expenditure of 2023 and another 19% plan to cut back.

Respondents were evenly split on which sectors will drive growth in the MENA region this year, with 27% voting for real estate and an equal amount voting healthcare. 24% see banks performing the best during the year.

Tap or click here (pdf) to see the full poll results.

EFG HERMES’ IPO PIPELINE IN SAUDI, GCC-

  • EFG Hermes is cooking up aUSD 300 mn Gulf-focused education fund: EFG Hermes plans to launch a fund to invest USD 300 mn in education in Saudi Arabia, the UAE, and Bahrain. The company is eyeing a number of potential projects — including setting up, acquiring, and managing schools as well as edtech initiatives — with a view to complete these projects in 5-7 years.
  • EFG Hermes will advise on 8-9 IPOs in the Gulf this year: The firm is currentlyworking on 5-6 IPOs for companies looking to list in Saudi and the UAE in the first half of this year and expects to get three other IPOs off the ground in Saudi Arabia and Oman in the second half of the year.
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