AlAhli Saudi Mid Cap Equity Fund taps huge potential in thriving investment category

To tap into this segment of the Saudi investment market, NCB Capital, the investment arm of the National Commercial Bank, has launched the AlAhli Saudi Mid Cap Equity Fund.

"The term mid cap defines those companies with a market capitalization between SR3 to 50bn, compared to small cap companies with a capital below SR3bn and large cap companies which are capitalized above 50 billion," explained Hasan ALJabri, Head of Investment Banking at NCB Capital. "In our continuous search to look for more for our clients, we have identified those mid cap companies that have the potential to perform better than the broader market."

"AlAhli Saudi Mid Cap Equity Fund offers investors the opportunity to benefit from the strong performance of mid caps," continued Hasan ALJabri. "In the Kingdom's thriving economic climate, medium size companies are expanding in size and delivering better than average profitability, making mid caps a highly attractive opportunity for investors to share in this time of increasing prosperity that we are now enjoying."

Furthermore, "Confidence level in the local market is gaining momentum as investors regaining trust and are more eager to invest in local funds. This is particularly true among people who know and live the local market to a much bigger extent than they do with the global markets" commented ALJabri

AlAhli Saudi Mid Cap Equity Fund is an open ended, Shariah compliant fund with a minimum subscription of SR5,000.

The fund provides investors with the opportunity to gain exposure to a wider range of Saudi equities.

"The fund aims to maximise its returns by investing primarily in mid-cap companies and selectively in small cap companies with relatively higher growth potential compared to the broad market" said Ayman Bajsair, Head of Product Development at NCB Capital. The fund offers the benefits of long-term capital growth and risk-reduction through asset allocation, sector diversification and stock selection.

NCB Capital is benchmarking the AlAhli Saudi Mid Cap Equity Fund against Standard & Poor's Saudi Mid Cap Shariah Compliant Index (with Market cap SR3-50bn).

By the end of 2007, there were more than 80 mid cap and small cap companies listed in the Saudi Market with total market capitalization of SR440bn, which accounted for more than 70% of the total number of companies listed and about 40% of the total market capitalization for the overall Shariah compliant stock universe.

The banking sector in particular has witnessed tremendous growth in recent years and banks which started as mid cap companies four years ago have grown into large cap companies.

Similar success stories exist in other sectors such as industrials, Petrochemicals and telecom.

"With a long list of IPO's coming up this year and beyond, the number of mid caps will increase significantly and it is worth noting that many of the IPO's during the past five years were mid cap companies that have outperformed the market since going public" Bajsair explains.

Looking ahead, soaring oil prices, increased government spending, improved regulation and ample liquidity growth are factors that are underpinning renewed confidence in the Saudi stock market, which closed 2007 showing a gain of 41% and has the potential to grow even more.

In this environment, the AlAhli Saudi Mid Cap Equity Fund is a compelling proposition for investors who are seeking to benefit from the huge potential of the thriving mid cap investment category.