EFG Hermes Co-CEO says Tadawul performance no longer tied to oil prices

Logo of EFG Hermes

Mohamed Ebeid, Co-CEO of EFG Hermes, a subsidiary of EFG Holding, said the correlation between oil prices and the performance of the Saudi Exchange (Tadawul) is no longer viable and stock prices are not anymore directly affected by changes in oil prices.

The Saudi market and other regional financial markets are now seen as a safe haven, compared to emerging markets that are anticipating interest rate cuts. This in turn gave a boost to the local and regional markets, given the varying conditions regionally versus emerging peers, he added in an interview with Argaam.

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Ebeid also indicated that the continued shift towards economic diversification away from oil in sectors such as tourism and services has contributed to attracting investor interest in regional markets. The GCC, according to the top executive, represents 7% of the MSCI Emerging Markets Index, while active corporate investors and fund managers constitute only 2%.

As for growth prospects, he said growth in the GCC region, especially in Saudi Arabia, is expected to exceed expectations in the non-oil sectors of the economy. This is despite the weak performance of petrochemical companies, albeit the main economic sectors such as consumer services and logistics are witnessing robust performance.

He pointed out that EFG focuses on a number of sectors in Saudi Arabia, including consumer services and logistics. Meanwhile, in the UAE market, it prefers banks, such as Emirates NBD and Abu Dhabi Commercial Bank, which leverage lower interest rates, in addition to Dubai-listed companies, such as DEWA and SALIC, as well as the UAE's logistics sector.

Commenting on the 18th session of the EFG Hermes One-on-One investment conference, Ebeid highlighted the key role that such events play in bringing investors closer to companies and introducing them to different types of investments.

The group is making various efforts to promote investments to the region. It holds an annual investor conference in London and organizes conference calls with investors to review financial results, in addition to elevating the research team’s coverage of regional companies, he added.

The top executive also stated that EFG seeks to expand the scope of its work and services in the GCC region, increase the number of investment products and open new departments such as wealth management to integrate with the offered products and services.