EFG Hermes in a report that focused on the Saudi market and some of the main stocks listed on Tadawul, said that Saudi Arabia has underperformed MENA and EM since mid-September due to fears over loans to contractors, the impact of a slowing global economy, and longer-standing concerns about the political succession.

The report issuer expressed view that it will take time for these overhangs to clear, justifying their recent downgrade of Saudi Arabia to Neutral. However, we believe that the selloff has been somewhat indiscriminate

At individual company level, Tabuk Cement (currently in Hermes' MENA Top 20 list) offers an 8.3% yield for 2012 – the share price having fallen 9% since 15 September – with the potential for strong EPS and DPS growth in 2012-14.

Advanced Petrochemicals has fallen 14% since 15 September, and is now offering an 8.5% 2012 yield based on current estimates. Hermes noted that investors typically focus on dividends in the closing months of the year

They saw Dar al-Arkan’s recent land purchases positively, believing such purchases are essential for long-term cash generation, hence putting the company back in the "Deep Value Territory". The stock has fallen 13% since 15 September, and is now trading at compelling valuation multiples of 8.8x 2012 P/E and 0.6x 2012 P/B. Project launches and subsequently higher recurring revenue streams may catalyse stock performance in 2013.

Hermes maintained Mobily, Mouwasat, Shaker and Aldrees in the MENA Top 20 list as well, while taking Chemanol out of the Sell ideas list, believing that it may – undeservedly – rebound after having fallen 15% since 15 September.