This is the best way to select Saudi stocks for investment

The head of the capital markets funds sector at Alawwal Capital, Alaa Al Ibrahim, said in an interview with “Al Arabiya” today, Thursday, that our expectations before the last holiday of the Hajj season indicated that petrochemical profits exceeded expectations, and in effects repetitions were high, while they have started to decline now with the emergence of positive results for major Saudi companies.

He added that the level of the Saudi stock market is historically the highest in the last 10 years and, considering the changes in the past months and in future, we expect the market level to be fair, if we look at the leading companies.

He explained that many small companies are losers and at the same time have reached exaggerated and dangerous price levels for small shareholders, while leading companies still have room to make further hikes if local and global economic conditions continue unchanged with signs of improving. oil prices, stable interest rates and the continuation of stimulus plans or gradually and logically reduced.

Alawwal Capital’s head of capital market funds sector said the rising oil price supports the Saudi market, as well as many internal factors affecting investors’ appetite in the market, including economic reforms and the cost of alternative opportunities given the returns on real estate investments and the cost of direct investments.

Alaa Al Ibrahim said the best way to select companies in to invest is to seek distinct management for companies and that the selection is consistent with the company’s serious expansion plans, adding that SABIC’s results in the last quarter are the highest in the last 10 years, even if the price of oil was not at the highest level, but the company has a distinct management, moreover the integration between Aramco and SABIC gives positive prospects, and there are also other companies that have separate management and expansion plans, including Sipchem and Saudi Telecom, who has achieved tangible successes, and also in other sectors such as Exeter and Jarir and how they benefit from the last period and increase their market share.

He added that the banking sector is less attractive than other sectors, for several factors, although the banking sector enjoys good and excellent support, but the last period saw loan exemptions and we do not know the default rates despite the excellent coverage of them in the banks, and we may begin to notice the increase in provisioning ratios due to the effects of the pandemic, which have not been clearly evident, as well as the real estate sector and the decline in demand for real estate loans by banks in the last period.

He continued: “There is a kind of ambiguity about the sector, which is relatively minor compared to other more visible sectors, and in light of the high valuations, investors have resorted to companies that have well thought out plans that are implemented.”

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