09 October 2009
CAIRO - Cairo-based investment bank EFG-Hermes shifted exposure on its Middle East Focus List away from Egypt and toward Saudi Arabia, saying a neutral stance was now right for the local market due to its recent strength.
Egypt's benchmark stock index was trading at around 6,693 points in mid-session trade on Thursday, nearly doubling in value since a year low of 3,380 hit in February. The Hermes index has also soared in value this year.
"We shift our exposure away from Egypt and towards Saudi Arabia. We believe a neutral stance on Egypt is appropriate given the strength of the market rally, which has lifted the Hermes Financial Index 89 percent since the 2009 low," the investment bank said in a note on Thursday.
"We upgrade our stance on Saudi Arabia given apparent progress in resolving the outstanding debts of troubled Saudi groups," it added.
EFG-Hermes, which on Wednesday had said it expected higher valuations for Saudi banks, cited expectations of a pickup in bank lending as well as the underperformance of Saudi Arabia relative to the region in recent months.
The bank said it added Saudi pipe system and technology firm Amiantit to its Focus List, as well as Arabian Cement, located in the country's western region.
"In Saudi Arabia, we focus on companies benefiting from infrastructure spending," the bank said.
It also added Egypt's National Societe Generale Bank as its top pick among Egyptian banks, saying its long-term fair value estimate offered a 34 percent upside.
It also added Commercial Bank of Qatar, saying it saw catch-up potential after the firm had underperformed the sector.
CAIRO - Cairo-based investment bank EFG-Hermes shifted exposure on its Middle East Focus List away from Egypt and toward Saudi Arabia, saying a neutral stance was now right for the local market due to its recent strength.
Egypt's benchmark stock index was trading at around 6,693 points in mid-session trade on Thursday, nearly doubling in value since a year low of 3,380 hit in February. The Hermes index has also soared in value this year.
"We shift our exposure away from Egypt and towards Saudi Arabia. We believe a neutral stance on Egypt is appropriate given the strength of the market rally, which has lifted the Hermes Financial Index 89 percent since the 2009 low," the investment bank said in a note on Thursday.
"We upgrade our stance on Saudi Arabia given apparent progress in resolving the outstanding debts of troubled Saudi groups," it added.
EFG-Hermes, which on Wednesday had said it expected higher valuations for Saudi banks, cited expectations of a pickup in bank lending as well as the underperformance of Saudi Arabia relative to the region in recent months.
The bank said it added Saudi pipe system and technology firm Amiantit to its Focus List, as well as Arabian Cement, located in the country's western region.
"In Saudi Arabia, we focus on companies benefiting from infrastructure spending," the bank said.
It also added Egypt's National Societe Generale Bank as its top pick among Egyptian banks, saying its long-term fair value estimate offered a 34 percent upside.
It also added Commercial Bank of Qatar, saying it saw catch-up potential after the firm had underperformed the sector.
© The Saudi Gazette 2009
