SNB Capital: 47% of fund managers see market as undervalued

The share of fund managers who consider the market undervalued rose to a record 47% in the third quarter of 2025, up from 29% in the first quarter, SNB Capital said.

Expectations for the Saudi market’s performance in Q3 2025 were mostly neutral at 58%, while bearish views dropped to 16% from 32% in the first quarter, according to an SNB Capital survey.

Fund managers continued to view oil prices, interest rates, and inflation levels as the main market drivers. Regarding oil prices, the majority expect them to remain close to current levels at $65–69.9 in 2025 and 2026, while most fund managers anticipate two rate cuts in both 2025 and 2026.

Optimism remained in the technology and banking sectors, with sentiment toward healthcare rising sharply to 56% from 29% in the first quarter. By contrast, petrochemicals continued to attract mostly negative sentiment.

The recent results reported by the banking and telecom sectors exceeded expectations, while results from petrochemicals and insurance came in below forecasts. Looking ahead to 2026, they expect healthcare and banking to be the best-performing sectors, while petrochemicals will likely underperform.

The survey also showed that 53% of fund managers hold cash levels of less than 5% of assets under management, indicating institutional liquidity has already been deployed. Managers said they were willing to pay a premium for earnings quality and growth opportunities, with growth strategies remaining their preferred approach.

As for the Nomu–Parallel Market, fund managers see it as lucrative, although liquidity is still a concern. That said, 47% of managers reported limited interest in Nomu, while 41% expressed strong or developing interest.

Looking ahead, 27% of fund managers plan to increase their investments in Nomu (vs. 39% previously), while 70% intend to maintain their current allocations with little change. Managers continue to view the software and technology sectors as the most attractive opportunities within Nomu.