|11-06-2014, 07:39 AM||#1|
GCC stock markets are at `attractive levels,` Kuwait Global`s analysts say
Stocks in the Gulf Cooperation Council (GCC) are trading in the mean time at attractive levels according to Kuwait’s Global Investment House, due to lower valuations than those of similar key emerging markets.
“Within GCC, outlook for Saudi Arabia appears positive, followed by Qatar, owing to its current compelling valuations. In terms of the one-year forward Price Earnings ratio, the six bourses traded at 9.4–13.0x during the month, significantly below the GCC region’s historic averages,” Global’s analysts Fouad Fahmi Darwish and Rasha Al-Qenaei said in the report.
The price-earnings ratio is fairly below the Gulf’s three-year and five-year historic averages of 13.5x and 13.4x respectively.
The market capitalization of all indices in the GCC fell during October, by 4.6% to $1,116.7 billion. This is attributed to declining oil prices alongside global growth worries.
However, long-term outlook is still intact, mainly after the inclusion of the three largest markets in the GCC in the MSCI Emerging Markets Index. The UAE and Qatar were included in May, while Saudi Arabia will be listed in the first half o 2017.
The coming period should see more gains in Saudi Arabia’s stock market, as foreign institutional investors activities are expected to increase on stock exchange.
Also, Saudi Arabia is planning to allow off-bourse trading of delisted or suspended shares.
In Qatar, the outlook is still stable, with markets expected to see around $200 million of passive funds entering the stock market after a likely upgrade to Qatar’s weighting on the MSCI Emerging Markets Index.
As for the UAE, S&P Ratings upgraded the market’s status from frontier to emerging in October, which could act as a boost to investors sentiment in the coming months.
All markets in the region are under pressure by declining oil prices, but lower valuations, coupled with strong economic growth and improving investor confidence will help markets for a long time.
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