Riyadh-Mubasher: Saudi Arabia's cement sector has been witnessing modest growth in dispatches after a weak 2014, when labor shortages impacted the pace of construction activities across the kingdom, Al-Rajhi Capital said in a report.

However, falling oil prices, which influences the government budget, is likely to impact the prospects of the sector in the near term.

Construction companies have been witnessing signs of spending cuts across various small and medium-sized projects.

"We also believe that local cement demand is near its peak, given that a number of mega projects are nearing completion," the report issuer said.

Furthermore, the sector continues to be weighed down by government’s policy of  price cap, production level mandates and ban on exports, which have led inventories to rise to high levels.

Al-Rajhi Capital selected Yanbu, Southern Province, Yamama, and Saudi Cement as its preferred stocks .