{"id":106429,"date":"2026-03-26T00:00:00","date_gmt":"2026-03-26T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/?p=106429"},"modified":"2026-03-26T03:57:20","modified_gmt":"2026-03-26T03:57:20","slug":"how-sico-navigated-the-first-tasi-underperformance-in-a-decade","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2026\/03\/26\/how-sico-navigated-the-first-tasi-underperformance-in-a-decade\/","title":{"rendered":"How Sico navigated the first TASI underperformance in a decade"},"content":{"rendered":"<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"> <strong>Sico Capi<\/strong><strong>tal\u2019s regional funds had a standout 2025<\/strong>, successfully navigating a rare period of \u201cdecoupling\u201d where the Saudi market underperformed its GCC peers for the first time in nearly a decade. While TASI faced a \u201cwarranted correction\u201d in 2025 \u2014 dropping some 13% \u2014 Sico\u2019s funds leveraged active stock picking and geographic diversification to deliver significant alpha for investors.<\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>We sat down with <\/strong><strong>Nishit Lakhotia<\/strong>, chief investment officer at Sico BSC; <strong>Shakeel Sarwar<\/strong>, head of asset management at Sico Bank; <strong>Hashem <\/strong><strong>AlSada<\/strong>, head of asset management at Sico Capital; and <strong>Fatema <\/strong><strong>Al Doseri<\/strong>, portfolio manager at Sico BSC, to discuss the year. <\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>How we fared against regional counterparts: <\/strong>Most Gulf stock markets closed 2025 higher, led by Dubai (+17.2%) and Abu Dhabi (+6.1%), supported by strong fundamentals and corporate earnings. Qatar, Oman, Kuwait, and Bahrain also ended the year in the green. Further from home, Egypt outperformed the region, with its benchmark EGX30 up 40% last year. <\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>We\u2019re not used to this: <\/strong>\u201c2025 was the first year after over a decade in which the Saudi market underperformed the other GCC markets,\u201d Sarwar noted. \u201cThe Saudi market was one of the few markets in the world with negative returns.\u201d<\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>Sico\u2019s Gulf Equity Fund delivered 15% gross returns<\/strong>, putting it among the region\u2019s top performers for the year, driven by a strategic shift into non-Saudi markets. \u201cThe ex-Saudi space did exceptionally well, and our returns reflect that divergence,\u201d Sarwar said. Lakhotia added that while Saudi equities lagged, other GCC markets offered stronger prospects, with growth in the UAE backed by real estate and financials, momentum in Kuwait\u2019s mortgage market, improved liquidity in Oman, and Qatar\u2019s LNG expansion. <\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\">\n<p class=\"tag-border-left\">Behind the TASI pullback<\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>It was a necessary correction: <\/strong>The market slump reflected a \u201cwarranted correction\u201d after stretched valuations, with the TASI entering 2025 trading at nearly 20x earnings \u2014 making it among the priciest across emerging markets, Sarwar said. According to AlSada, these elevated multiples drove a \u201crotation,\u201d as asset managers locked in gains on overvalued names and redeployed capital across more attractive GCC prospects.<\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>What dampened the market: <\/strong>Heavy concentration \u2014 around 60% \u2014 in financials and petrochemicals amplified the decline as banks faced liquidity pressures and net interest margin compression, while petrochemicals were hit by global oversupply and rising domestic fuel costs. Lakhotia added that the government\u2019s reprioritization of major project spending \u2014 previously \u201csteroids to the market\u201d \u2014 further cooled investor sentiment. The pullback extended to high-growth sectors such as healthcare and consumer, where sharp de-ratings followed as lofty valuations met softer earnings and evolving regulations.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">Navigating the correction<\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>The Sico Kingdom Equity Fund outperformed the Saudi benchmark by 9% last year <\/strong>through replacing broad sector wagers with a disciplined, research-driven \u201cstock-picking\u201d strategy. AlSada explained that the fund maintained a bottom-up approach, targeting \u201cbanks that are going to benefit in an interest declining environment\u201d and real estate firms resilient to recent regulatory shifts. By staying close to specific company convictions, the fund managed to hedge effectively against the broader market slump.<\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>A conservative, capital-first approach:<\/strong> Al Doseri and Sarwar credited the fund\u2019s resilience to a philosophy prioritizing capital protection over chasing lofty market highs. Staying underweight in expensive names like Acwa Power \u2014 which fell 50% during the year \u2014 and Aramco, the fund instead backed high-conviction prospects like ins. fintech aggregator Rasan, delivering strong performance. \u201cWe are not great when the markets are ecstatic [\u2026] but in difficult markets, we have time and again proved that we come out very strong,\u201d Sarwar said. <\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\"><strong>Sico was also selective with its IPOs <\/strong>\u2014 subscribing to only one of several offerings that hit the market over the past year.<\/p>\n<p style=\"border-right-style:solid;border-top-width:0pt;border-left-style:solid;orphans:2;text-align:left;padding:0;margin:0;border-right-width:0pt;line-height:1.15;border-left-width:0pt;border-top-style:solid;border-bottom-width:0pt;border-bottom-style:solid;widows:2\">\n<p class=\"tag-border-left\">Catalysts on the horizon<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Foreign ownership limit in focus:<\/strong> Despite lingering liquidity pressures, Lakhotia points to easing the foreign ownership limit as the most immediate catalyst, shifting the market away from strict QFI requirements and opening access to smaller global institutions to invest directly. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Sarwar frames the reform as a structural shift:<\/strong> While it may not drive immediate large-scale inflows, it should steadily improve liquidity by making it easier for a broader pool of investors to enter and exit the market. Sarwar cautions, however, that the move is \u201ctwo-pronged\u201d \u2014 reinforcing Saudi Arabia\u2019s global investment appeal, but also increasing exposure to \u201chot money\u201d and, in turn, market volatility.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Sico sees end of \u201cirrational exuberance\u201d for IPOs:<\/strong> The era of viewing every IPO as \u201cfree money\u201d is over, said Lakhotia. After multiple listing failures in 2025 due to aggressive valuations, he stressed that success this year hinges on pricing pragmatism, noting that IPOs will perform if sellers are \u201cwilling to leave something on the table for investors.\u201d Sarwar added that companies can no longer \u201cthrow an IPO at any price\u201d and expect that demand will follow, as the market has realigned with broader fundamentals.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Active stock picking and shifts into ex-Saudi markets provided a hedge against TASI valuation resets<\/p>\n","protected":false},"author":1,"featured_media":106430,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2704],"tags":[2419,10,29,3217,3812],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-106429","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-capital-markets","tag-capital-markets","tag-enterpriseam-ksa","tag-ipo-watch","tag-sico","tag-tasi","wpautop","entry"],"acf":{"mongo_id":"1f7d60cc-cce0-46e3-9c7e-e7e21f55b5a0","order":"5","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/7\/1196.jpg","photo_position":"above","homepage_title":"","full_issue_title":"How Sico beat the 2025 TASI slump","related_issue":[106421],"teaser":"Active stock picking and shifts into ex-Saudi markets provided a hedge against TASI valuation resets"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - 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