Nearly half of Saudi fund managers now believe Tadawul is undervalued, Argaam reports, citing SNB Capital’s latest fund managers report. Some 47% of managers said the market is trading below fair value in 3Q — up sharply from 29% in 1Q, marking the highest reading on record.

Overall sentiment toward market performance was mostly neutral, with 58% of managers expecting the market to move sideways in the current quarter. Bearish views declined, with only 16% of managers forecasting a drop in 3Q, compared with 32% earlier this year.

Fund managers continue to see oil prices, interest rates, and inflation as the main drivers of the market. Most expect oil to hover in the USD 65-69.9 range through 2025-2026, while anticipating two rate cuts in each of those years.

The sector outlook: Optimism toward technology and banking remains strong, while healthcare saw the biggest jump in sentiment, with 56% of managers bullish compared with 29% in 1Q. The petrochemicals sector continues to attract the most pessimism. Healthcare companies and banks are expected to be the best performers in 2026, while petrochemicals are to perform the weakest.

Liquidity remains tight: 53% of managers reported cash-holdings of less than 5% of AUM, suggesting institutional capital is largely deployed.

Room for higher valuation multiples: Managers said they are willing to pay a premium for earnings quality and strong growth potential, with growth investing still their preferred strategy.

On the Nomu side, managers generally view the parallel market as attractive but hampered by liquidity constraints. Some 47% said their interest in Nomu remains low, while 41% reported strong or growing interest. Looking ahead, 27% of managers plan to increase allocations to Nomu, while 70% expect to keep exposure unchanged. Software and technology remain the most attractive sectors.

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