HSBC leaps from runner-up to recapture the No. 2 position it most recently claimed in 2011. John Lomax and Raj Sinha together guide 11 analysts — five of whom are based in Dubai, four in Saudi Arabia and two in London. Their Middle East & North Africa sector portfolio spans 102 names, Sinha reports, and investors appreciate that range. “What I like most about them is their coverage horizon,” comments one money manager, who also hails their outreach to clients and flash notes on the chemicals industry. Saudi Arabian petrochemicals along with Egyptian and Qatari banks are among the HSBC crew’s favorite market segments for the balance of 2014. Driving the performance of Saudi petrochemicals stocks is increasing demand, particularly from China, at a time when a “supply vacuum has been developing,” Lomax reports. Against this backdrop, the strategists are forecasting a “constructive dividend yield” and “widening margins” for the group, he notes. For their part, Egyptian banks represent a “play on [the economy’s] recovery on the back of the restoration of political order,” Lomax explains, with pent-up loan demand redounding to the benefit of those institutions as the cycle picks up. Finally, Qatari banks are similarly poised to benefit from their “exposure to strong domestic demand,” he adds. “We prefer Qatar to the United Arab Emirates, partly on valuation grounds but also because the economy appears to be at an earlier stage in the cycle, posing less risk of overheating.” |
The 2014 Emerging EMEA Research Team: Middle East & North Africa Equity Strategy, No. 2: John Lomax, Raj Sinha & team