Gulf Investment Fund PLC on Friday said its outlook remains positive as rising inflation unsettles economies that are not part of the Gulf Cooperating Council.
Gulf Investment is a London-based closed-ended investment company, seeking long term capital growth and dividend income from investment within the Gulf Cooperation Council region. Several countries make up the GCC, including Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman.
For the three months ended September 30, the firm’s net asset value per share rose 3.7% against its benchmark index, the S&P GCC Composite, which was down 0.2%.
Gulf Investment attributed this to underweight positions in Saudi Arabia, which fell 1.0%, and Kuwait, down 4.1%, as well as an overweight in Qatar, up 4.1%. Stock selection also contributed to the outperformance, it said.
Despite a sell-off in global markets during the quarter, GCC equity markets were comparatively resilient, down 0.2%, as opposed to MSCI EM, down 13%.
Gulf Investment highlighted positive performance from holdings in Qatar Navigation, up 20%, and Qatar Gas Transport, up 10%. Saudi Ceramic Company was down 11% however, while the Saudi National Bank was down 4.2%.
The firm reduced its exposure to healthcare and industrials during the quarter to capture other opportunities. It increased exposure to the financials, consumer discretionary and materials sector.
Financials exposure increased to 39% of NAV from 33% in the second quarter. This was attributed to new holdings in Bupa Arabia, Riyad Bank and Saudi British Bank.
Gulf Investment also said that oil remained an important buffer for GCC economies, particularly in the context of global inflation and interest rate hikes.
Looking ahead, the firm’s outlook remained positive: ‘Growth is not only driven by the oil economy but also the recycling of government revenues into investment initiatives and, to a lesser extent, by household and business spending.’
Gulf Investment continues with its concentrated portfolio approach, and ended the quarter with 27 holdings.
Gulf Investment shares were trading 0.6% lower at $2.11 each in London on Friday afternoon.
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