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MENAFN - Arab News - 29/12/2012

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(MENAFN - Arab News) Shares in Saudi Arabia will offer the "value story" across emerging markets next year as stable oil prices and government spending are set to attract more investors to the stock market, according to analysts.

"I think the Saudi market should offer strong relative value because of the attractive fundamentals in an uncertain world," Jarmo T. Kotilaine, a regional analyst, told Arab News yesterday.

Basil Al-Ghalayini, CEO of BMG Financial Group, commented: The fundamentals are quite promising for 2013 with the continuation of the unprecedented government spending on certain mega projects.

Furthermore, we are expecting more IPOs to be released in 2013 compared with 2012 which should provide the stock market further depth and breadth."

The Saudi benchmark Tadawul All Share Index gained 7 percent this year, lagging the 15 percent gain for the MSCI Emerging Markets Index (MXEF), a Bloomberg report said.

It said the Saudi index offers a dividend yield of 3.6 percent compared with 2.7 percent for MSCI EM Index.

"We expect the first half to be bullish for Middle East and North Africa equities and see Saudi Arabia as the value story for 2013 across the emerging market space," analysts Digvijay Singh and Alexey Zabotkin at VTB Capital Plc, the London-based investment-banking arm of VTB, wrote in a research note, with an overweight recommendation on the Kingdom.
Oil prices, infrastructure spending and dividend yields are among catalysts that will help boost share prices, they said.

Kotilaine, meawhile, pointed out that the global backdrop will be key in determining the relative attractiveness of the Saudi market.
He said: "A failure to work out a meaningful short-term solution to the US fiscal saga and the euro zone crisis would likely revive oil demand erosion concerns, however temporarily.

This might hit both oil output and the relative competitiveness of the petrochemicals sector. However, the government is well positioned to counteract such negative forces to ensure relative continuity."


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