SNB: 66% of fund managers see market as ‘fairly valued’

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SNB Capital said, in its Fund Manager Survey, that 66% of the managers believe the market is fairly valued, down from 75% in Q2 2026, while those seeing the market as undervalued increased to 29% (from 11% in Q2 2026). It also noted that only 6% consider the market overvalued, the lowest level since Q1 2022.

The managers turned decisively neutral on the Saudi market for the remainder of 2026. “Neutral views jumped to 60% (from 30% in Q2 2026), while bullish views stood at 29% and bearish views fell to 11% (from 35%), the lowest levels since Q2 2024, it added.

“We believe the shift reflects easing valuation concerns following the recent muted performance and a relatively strong earnings season. Moreover, 74% of the managers expect oil prices to normalize within 3 to 6 months post the end of the conflict while expecting refined product prices to normalize within 12 months and beyond (46%),” said the research firm.

It indicated that managers expect the market in 2026 to be mainly driven by the development of the ongoing regional tensions and oil prices, with 56% expecting the geopolitical situation to stop being a driver of market performance within 3 to 6 months.

For oil prices in 2026f, 69% expect the average to range between $75.0-84.9, with the largest concentration (46%) in the $80-84.9 range.

Q2 2026 Results

The managers indicated that majority of the recent results were as expected, mostly in Telecom (77%) and Industrials (74%). Overall, Energy had the highest "better than expected results" with 44% of the managers, while Tourism had the highest "less than expected results" at 46%, closely followed by Petrochemicals at 43%, according to the report.

Sector Picks

In Q3 2026, the managers are mostly bullish on Insurance (74%), Technology (51%), bearish on Petrochemicals (60%), and neutral on Telecom (63%) and Energy (54%).

Moreover, they kept expectations for the top outperforming sector for the remainder of 2026 to Insurance (37%), followed by Banking (23%), and the worst performer to Petrochemicals (31%).

Asset Allocation Trends

According to the report, the level of cash kept in fund managers' portfolios indicates a meaningful re-deployment into the market. In Q3 26, only 9% of the managers are keeping a cash level of more than 20% in their portfolios (versus 22% in Q2 2026), with none holding above 30%.

Meanwhile, the managers that keep a cash level of less than 5% rose to 51% (from 33% in Q2 2026).

Preferred Investment Strategy

For investment strategies, the strong preference for growth seen in Q2 26 (64%) has broadened. Large-cap strategy emerged as the most preferred for the first time at 35%, followed by value and growth at 32% each.

Participation in New IPOs

For new IPOs, 54% of the managers said their interest to participate in new offerings depends on sector/company specifics, up from 46% in the past survey, while 26% were not interested in any new IPOs. Technology remains by far the most attractive IPO sector at 54%.

Nomu View in Q3 2026

In Q3 26, 46% of the managers believe that Nomu is an attractive market but liquidity is an issue, said SNB Capital, pinpointing the following highlights:

- 37% of manager are neutral depending on the attractiveness of each company.

- 83% of the managers indicated that they plan to keep their Nomu market exposure broadly unchanged,

- Only 6% plan to increase their exposure.

- The managers kept preferences for Software and Technology (66%), followed by Healthcare (34%) and Materials and Industrials (31%).