Fund managers flag liquidity drag, see 2026 rebound

SNB Capital’s latest fund manager survey showed that weak liquidity has been the most influential factor weighing on the performance of the Saudi Exchange (Tadawul) in recent months. Managers expect foreign investor inflows to be the main liquidity driver in 2026.

A total of 43% of fund managers expect the market to begin recovering in the second half of 2026, supported by foreign inflows and improved liquidity levels, while 34% expect early signs of recovery to emerge in the first half of the year.

Managers said market performance in 2026 will be shaped by key factors, including oil prices, with most forecasts placing the average between $55 and $62.9 per barrel, as well as overall macroeconomic trends.

Opinions on the market’s performance in the fourth quarter of 2025 varied. Optimistic views increased to 34% from 26%, while pessimistic expectations also rose to 26% from 16%.

In terms of sector preferences, fund managers showed growing optimism toward the tourism, technology, and insurance sectors, while pessimism toward petrochemicals persisted. They maintained a neutral outlook on the energy sector. Expectations for the best-performing sectors in 2026 shifted away from healthcare toward insurance, banks, and telecom.

The survey indicated a notable change in asset allocation strategies. The share of managers holding 10–20% cash rose to 26%, up from 6% in the previous quarter, while those holding less than 5% cash declined to 37% from 53%.

Investment preferences shifted from a growth strategy in the third quarter to a value-focused approach in the fourth quarter, adopted by 60% of managers. Over the next 12 months, 42% of managers expect to increase exposure to Tadawul, while 38% expect no change.

Regarding the Nomu Parallel Market, 40% of managers hold a neutral view. About 37% consider Nomu attractive but see liquidity constraints as a significant obstacle, down from 59% previously.

Meanwhile, 57% reported declining or weakening interest in the market, compared with 43% who reported high or growing interest. A total of 70% of managers plan to keep their exposure to Nomu unchanged, while 24% plan to increase it. Sector preferences in Nomu remain concentrated in software and technology.