REG - Gulf Investment Fund - Quarterly Report Q2 2024

Gulf Investment FundAnnouncement

10/07/2024 15:30

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RNS Number : 9172V  Gulf Investment Fund PLC  10 July 2024

10 July 2024

Legal Entity Identifier:
2138009DIENFWKC3PW84

 

Gulf Investment Fund plc (GIF) report: 3 months to 30(th) June 2024

§ Net asset value (NAV) down 3.6 per cent (GIF's benchmark, S&P GCC Index
down 3.9 percent)

§ GCC's 2024 economic outlook good with oil sector recovery, government
spending and ongoing reforms amid global challenges.

Performance

GIF NAV was down 3.6 percent for the quarter, although this outperformed the
benchmark S&P GCC Index which was down 3.9 per cent.

Positive performance came from Qatar Navigation (up 8.9 percent), The
Mediterranean and Gulf Insurance Reinsurance Group (up 10.7 per cent), Qatar
National Bank (up 3.0 per cent) and Qatar Gas Transport (up 16.9 per cent).
Negative performers were Saudi National Bank (down 9.8 per cent and Commercial
Bank of Qatar (down 10.9 per cent).

On 30(th) June 2024, the GIF share price was trading at an 8.0 per cent
discount to NAV.

Portfolio changes

GIF increased exposure to the Materials and Communication Services sector as
valuations look undemanding with an attractive growth profile.

Weighting of the fund in Materials increased to 16.6 per cent of NAV in 2Q
2024 from 11.1 per cent, with new holdings in the Saudi cement sector. Saudi
Cement, Yamama Cement, Southern Cement, and Yanbu Cement are well-positioned
for increase in demand given their underutilized capacity potential.

The fund added a new holding in Communication services taking its weight to
4.6 per cent of NAV, mainly from the addition of Mobile Telecommunication
Company, Kuwait. It is among the largest mobile operators in the wider region,
with operations in 15 African countries and 7 in the Middle East. GIF's
exposure to industrials and energy rose from 23.0 per cent to 25.6 per cent
and from 0.0 per cent to 1.0 per cent, respectively.

The fund's weighting in the Consumer and Real Estate sectors decreased from
12.0 per cent to 5.1 per cent and from 5.4 per cent to 2.6 per cent,
respectively. The fund divested entirely from the health care sector
(weighting of 2.2 per cent on 31 March 2024) in pursuit of more favorable
investment opportunities elsewhere as we believe there are other attractive.

In country terms and relative to the benchmark, GIF remains overweight in
Qatar (23.8 per cent vs. benchmark weight of 9.4 per cent) and Oman (2.1 per
cent vs 1.0 per cent). The fund also has an overweight to Kuwait (10.4 per
cent vs 9.6 per cent) and is further underweight UAE (4.4 per cent, down from
8.4 per cent at end of March, vs benchmark weight of 17.5 per cent) as we
reduced our UAE banking exposure. GIF's weighting in Saudi Arabia, GCC's
biggest market, is 59.2 per cent vs benchmark weight of 61.8 per cent.

Qatar remains an overweight as its macroeconomic resilience and Qatari stocks'
defensive characteristics make the country attractive.

GIF ended the quarter with 34 holdings: 21 in Saudi Arabia, 6 in Qatar, 3 in
the UAE, 3 in Kuwait and 1 in Oman.

 

 

 

Outlook

The GCC region has a positive economic outlook, with real GDP growth projected
to rebound to 2.4 per cent in 2024 and rise to 4.9 per cent in 2025. This
forecast is driven by substantial GDP increases in the UAE and Saudi Arabia,
supported by expected increase in oil production in the latter half of 2024
and a global economic recovery. GCC growth is not solely dependent on oil
since non-oil sectors are expected to sustain robust growth in the medium
term. GCC infrastructure project awards for H1 2024 now stand at $104.6bn.

The IMF expects UAE and Saudi Arabia to enjoy real Non-Oil GDP growth of 4.1
per cent and 3.9 per cent, respectively, in 2024; and 4.2 per cent and 5.3 per
cent in 2025.

GCC inflation continues to trend downwards, with the IMF forecasting consumer
price inflation to fall from 2.2 per cent in 2024 to 2.1 per cent in 2025.

GCC visitor numbers continue to rise. In Q1 2024, Qatar saw a 40 percent
increase in visitors over the last year, reaching 1.6 million. Saudi Arabia's
inbound visitor spending grew by 22.9 per cent to over $12 billion during the
first quarter of the year.

The GCC continues to look attractive on the back of increasing benefits of the
socio-economic reforms being rolled out in the region and the large
infrastructure project awards. This year has also seen the Central Banks of
the Eurozone, Canada, and Switzerland, among others, instigate rate cuts which
leads to increased expectation that the US Fed will follow suit soon.

 

 GIF Country Allocation as of 30(th) June 2024
                                                  Company              Country       Sector
                                                  Saudi National Bank  Saudi Arabia  Financials
                                                  Qatar National Bank  Qatar         Financials
                                                  Qatar Navigation     Qatar         Industrials
                                                  Integrated Holding   Kuwait        Industrials
                                                  Yamama Cement        Saudi Arabia  Materials

 

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