The outlook for the sector is dim even though crude oil is trading at higher prices than at the start of the year. Year to date, the prices of West Texas Intermediate crude and Brent crude are up 32.6% and 21.5% respectively. “[Energy stocks] are the worst performing because nobody believes that these prices are sustainable,” says Suresh Tantia, senior investment strategist at Credit Suisse in Asia-Pacific, at the same briefing.
SINGAPORE (Dec 20): Saudi Arabian Oil Co (Saudi Aramco), the kingdom’s national oil corporation (NOC) and world’s biggest oil producer, had a positive debut on the Tadawul exchange. Its shares have gone up 19% from its IPO price of SAR32, closing at SAR38 on Dec 16 and giving the company the US$2 trillion ($723.1 billion) valuation that Saudi Arabia was aiming for. However, the same optimism could not be seen in the broader and related sectors.
Ray Farris, chief investment officer at Credit Suisse in South Asia, says the bank is still “underweight” energy stocks. “From an asset allocation perspective, the sector still doesn’t [seem] to be particularly attractive,” he says at an outlook briefing on Dec 2. He did concede that there could be one or two individual gems within the sector.
