REG - Gulf Investment Fund - Quarterly Report Q4 2023

Gulf Investment FundAnnouncement

11/01/2024 15:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240111:nRSK4389Za&default-theme=true

RNS Number : 4389Z  Gulf Investment Fund PLC  11 January 2024

11 January 2024

Legal Entity Identifier: 2138009DIENFWKC3PW84

 

31 December 2023

Gulf Investment Fund plc (GIF) Quarterly Report for 3 months to 31 December
2023

§ Net Asset Value (NAV) up 10.6 per cent (S&P GCC Index up 6.1 per cent).

§ In 2023 GIF NAV rose 32.1 per cent versus the benchmark which was up 10.0
per cent (22.1 per cent outperformance)

§ Outlook for the GCC is good with socio-economic reforms, tourism
initiatives and continuing investment in infrastructure projects.

§ GIF traded at a 13.2 per cent discount to its NAV as of 31(st) December
2023.

Performance

GIF outperformed its benchmark (S&P GCC Composite Index) in the quarter to
31 December by 4.6 per cent. Outperformance in the quarter came from holdings
in Saudi and Qatar and an underweight position in Kuwait and Dubai.

The Israel-Hamas conflict initially led to volatility in GCC markets. However,
they have largely recovered from the lows in October given the very low
economic exposure to Israel and Palestine. We expect markets to continue to
make progress on the back of continuing regional reforms and infrastructure
spending.

In terms of stocks, performance came from holdings in Middle East Healthcare
(up 60.3 per cent in the quarter) Saudi National Bank (up 17.8 per cent)
Integrated Holding Co. (up 18.1 per cent) Saudi Airlines Catering (up 25.2 per
cent) and Saudi Ground Service (up 22.1 per cent).

Holdings that dragged on performance were Cenomi Retail (down 15.4 per cent)
Qatar Navigation (down 5.4 per cent) and Qatar Insurance Company (down 3.0 per
cent).

In 2023 as a whole the GIF NAV is up 32.1 per cent, outperforming the
benchmark by 22.1 per cent.

On 31 December 2023, the GIF share price was trading at a 13.2 per cent
discount to NAV (five-year average discount 6.3 per cent).

Portfolio changes

GIF increased exposure to financials, materials, and consumer discretionary
sectors, as valuations look undemanding coupled with attractive growth
profiles.

The financials sector weighting increased to 46.3 per cent of NAV in the
quarter from 38.5 per cent in Q3, as Gulf Bank of Kuwait, Arab National Bank
and Bank Muscat joined the portfolio.

Exposure to the materials sector increased from zero to 5.5 per cent as
Advanced Petrochemical, City Cement and Yamama Cement were added to the
portfolio. Given their proximity to megaprojects and current relatively low
capacity-utilization, Yamama and City Cement are set to enjoy increased
demand.

Exposure to healthcare increased by 1.2 per cent points as GIF's healthcare
holding, Middle East Healthcare increased in value.

The fund reduced exposure to industrial, energy and real estate sectors.

In terms of GCC markets, GIF increased weight in Saudi Arabia by 7.6 per cent
points to 59.3 per cent (vs benchmark weight of 61.4 per cent). The fund
remains overweight Qatar (24.8 per cent vs an index weighting of 10.0 per
cent), underweight UAE (7.1 per cent vs benchmark weight of 17.7 per cent) and
Kuwait (6.5 per cent vs benchmark weight of 9.3 per cent). Qatar still trades
at a discount to its GCC peers, trading at 12.9 times earnings (GCC average is
16.6 times).

GIF ended the quarter with 28 holdings: 16 in Saudi Arabia, 7 in Qatar, 2 in
the UAE, 2 in Kuwait and 1 in Oman. The cash holding is minimal.

 

Outlook

Gulf Cooperation Council (GCC) is a region with a robust economic
diversification plan to reduce reliance on oil. Mega infrastructure projects,
tourism initiatives and socio-economic reforms all contribute to a positive
outlook for the region. The IMF expects GCC real GDP growth to be 1.5 per cent
and 3.7 per cent in 2023 and 2024 respectively. Non-oil GDP growth is expected
to be 4.3 per cent and 4.0 per cent in 2023 and 2024.

Tourism-related industries are a driver of non-energy growth. Qatar saw the
strongest growth, globally, of international tourist arrivals in Jan-July
2023; 95 per cent higher than in 2019. Saudi Arabia was second with a 58 per
cent increase on 2019. Visitors to Dubai increased by 21.9 per cent in the
Jan-Oct 2023 period, with 13.9 million visitors, surpassing pre-pandemic
levels. The Middle East is the only world region to surpass 2019 levels in
this period.

OPEC predicts year-on-year growth of oil demand of 2.5 million bpd in 2023 and
2.2 million bpd in 2024. The IMF projects GCC inflation at 2.6 per cent and
2.3 per cent in 2023 and 2024, providing governments in the region with the
room to increase fiscal spending.

The GCC countries are actively engaged in transformative socio-economic
reforms. Post-pandemic, there's notable progress in social and
business-friendly reforms, fiscal sustainability, and strategic investments in
digital and green infrastructure.

 

 GIF Country Allocation as of 31 Dec 2023    Top 5 Holdings
                                             Company                     Country       Sector       % NAV
                                             Saudi National Bank         Saudi Arabia  Financials   9.5%
                                             Middle East Healthcare      Saudi Arabia  Health Care  6.2%
                                             Saudi British Bank          Saudi Arabia  Financials   6.1%
                                             Qatar Navigation            Qatar         Industrials  5.4%
                                             Integrated Holding Company  Kuwait        Industrials  5.0%
 Source: QIC; as of 31 Dec 2023.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCFLFSSLSILLIS