22nd Oct 2019 10:27
(Alliance News) - Gulf Investment Fund PLC said Tuesday it was able to outperform its benchmark in the third quarter.
In the three months to September 30, the Gulf Cooperation Council-focused investment company's NAV grew by 1.0% compared to the S&P GCC index, which lost 5.5%. Over the nine month period, Gulf Investment's NAV is up 18% whilst the benchmark has only added 3.7%.
"The funds outperformance during the quarter was attributed to substantially lower exposure to Saudi Arabian market, which performed negatively, while, relatively higher exposure to the UAE market further supported the outperformance," the company explained.
At June 30, the fund reported a NAV per share of USD1.3504.
Gulf Cooperation Council markets were hit by weakening oil prices which were down 8.7% in the quarter, GIF said.
The fund continued: "Drone attacks on Saudi oil facilities undercut investor confidence while Kuwait's market was dampened by the Emir's weakening health and elevated valuations. However, market volatility in Saudi Arabia subsided towards the end of September as authorities confirmed that the impact on the oil production will be short lived."
During the quarter, Saudi Arabia was down 8.3%, Kuwait down 2.6%, and Qatar down 0.8%. These losses were partially offset by gains of 4.6% in Dubai, 1.6% in Abu Dhabi, 3.4% in Oman and 3.1% in Bahrain.
GIF also noted that Saudi Arabia is "set to endorse" the listing of the country's oil company Aramco on the domestic stock exchange, as soon as November.
"In the first phase, officials are planning to list as much as 3% of the company. Domestic listing is the priority for now, although one on an international exchange may follow," GIF said.
The fund added: "Aramco IPO is a centrepiece of the Saudi's economic diversification plan, with the government targeting valuation of USD2 trillion. If the desired valuation is achieved, the proposed 5% dilution could bring as much as USD100 billion which could be utilised for proposed development plans, aimed at weaning economy off its reliance on oil."
Looking further ahead, GIF commented: "With large investments anticipated over the next few years, the investment adviser expects to see increasing opportunities in banking, infrastructure and industrials. The key risk remains the direction of oil prices. If these drop further, GCC governments will start to limit spending, undercutting growth. The investment adviser remains optimistic as to regional growth, buoyed by planned infrastructure projects and the momentum of social as well as economic reforms."
Shares in Gulf Investment Fund were untraded in London on Tuesday but last closed at USD1.27 each.
By Paul McGowan; [email protected]
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