Quencia Saudi Equity Fund

The principal investment objective of the Fund is to  generate medium to long term capital appreciation through investing in equities listed on the Saudi Arabian stock exchange (Tadawul).

The Fund intends to utilize a dynamic investment strategy to maximize total return over the medium to long term relative to the Tadawul All Share Index (TASI).

Saudi Arabia is undergoing a major economic and social transformation as part of the country’s Vision 2030, which aims to diversify the MENA region’s largest economy away from oil. While the economic transformation might be painful in the short term, longer term it is very positive for the strength and sustainability of the Saudi economy and offers investors numerous attractive investment opportunities as government assets are privatized, new mega cities are launched, and local industries are developed. The social transformation will also generate its own set of attractive investment opportunities as women start to drive and movie theatres are setup. Just like with any major transformation, there will certainly be winners and losers. Stock selection in such an environment is key, so is local market knowledge and experience.

The Saudi equity market is by far the largest and most liquid in the MENA region with a market capitalization of SAR 1.7Tn and an average daily turnover of SAR 3.3Bn. It is the world’s largest market not to be included in any major global index yet. FTSE Russell upgraded the Saudi market to secondary emerging market status on 28 March 2018 with a weight of 2.7% in its EM index – the inclusion will be effective between March and December 2019. MSCI, whose EM Index has benchmarked assets of around $1.6Tn compared to FTSE EM Index’s $150Bn, is also expected to upgrade Saudi to emerging market status in June 2018 with an expected weight of 2.5% and effective inclusion in 2019. Total foreign inflows into the Saudi market could be in excess of $50Bn by end of 2019 and a strong rally is expected between the upgrade announcement and the effective inclusion as seen in other markets that were upgraded earlier. The fund will be well positioned to capitalize on this major event.